Crowd1 has initiated a share conversion for its "Rewards" program, offering affiliates equity in Digital Partners Network plc, a London-based shell company. This move, four months after initial reports, involves replacing virtual "owner's rights" with DPN shares, prompting concerns about an exit scam.
The company announced the discontinuation of its Crowd1 Rewards program, stating successful discussions with Digital Partners Network plc. Affiliates received an offer to exchange their existing virtual Rewards for DPN shares. This exchange mechanism targets the "owner's rights" that Crowd1 initially sold as virtual shares when it launched in 2019.
Crowd1's original business model revolved around soliciting investments into these virtual shares, promising a return on investment. The company paid these returns using funds from subsequent investors, establishing a classic Ponzi scheme structure. As new recruitment slowed, the company slashed calculated returns, leaving affiliate investors with diminished prospects.
Digital Partners Network is a UK shell company incorporated on July 27, 2021, shortly after Crowd1 first signaled its intention for a UK entity. Corporate records list John Moore and Leonard Martin Fertig as officers. Neither figure is known within the Crowd1 affiliate community. The company's registered address is a virtual office located in London.
Selling shares in the UK requires registration with the Financial Conduct Authority (FCA). A search of the FCA's public registry confirms that Digital Partners Network holds no registration with the regulator as of this publication. This means DPN lacks the necessary authorization to legally offer or sell securities to the public in the UK.
The current process involves Crowd1 swapping its internal "owner's rights" virtual shares for Digital Partners Network virtual shares within its own database. Affiliates received a seven-day window to manually opt out of this conversion. After this period, all "owner's rights" shares company-wide will automatically convert. Those who opt out will likely see their original "owner's rights" remain worthless, as they have been for over a year.
Crowd1 has also introduced a Know Your Customer (KYC) requirement as part of this process. Investors must download an app to their mobile phones to proceed and receive DPN shares, with identification required later. This late implementation of KYC is expected to cause significant disruption, particularly among Crowd1's current primary investor base in countries like Azerbaijan (21%), Russia (18%), and Kazakhstan (9%), according to Alexa web traffic data.
Crowd1 explains the DPN move as an "exciting opportunity," citing DPN's partnership in the payments industry, including a multiwallet project, as being in its "final negotiations stage." Crowd1 first unveiled the Multiwallet project in June alongside its initial announcement regarding the UK shell company. Both Digital Partners Network and Multiwallet are presented as third-party entities, though their ties to Crowd1 remain central.
This share conversion represents the latest in a series of ventures by Crowd1 that have failed to deliver promised returns. The company's history includes purported gambling partnerships, an app platform, a failed merger with Mark Seyforth's MLM opportunity, and the Planet IX crypto Ponzi. Affiliates continue to demand the returns they were promised, which Crowd1 cannot generate without a steady influx of new investment.
Regulatory bodies in Peru, New Zealand, Mauritius, South Africa, the Philippines, Norway, Namibia, Paraguay, Gabon, Vietnam, Cote d'Ivoire, Slovakia, Hungary, and the Czech Republic have issued warnings or taken action against Crowd1. These interventions have curbed recruitment in those jurisdictions. However, Swedish authorities have taken no action against Crowd1 founder Jonas Erik Werner and former CEO Johan Stael von Holstein, both Swedish nationals. Von Holstein reportedly cashed out and disappeared in November of last last year. Werner and other Crowd1 principals have since relocated to Dubai.
Dubai remains a known haven for MLM scams. The United Arab Emirates lacks active regulation of multi-level marketing fraud. UAE authorities rarely cooperate with foreign investigations and maintain limited extradition treaties, making it difficult to pursue cases against individuals residing there. The UK's Financial Conduct Authority has also indicated a lack of interest in regulating MLM-related securities fraud.
The anticipated outcome for Crowd1 affiliates is to be left holding publicly tradable but ultimately worthless shares in Digital Partners Network. This scenario would allow Werner and his associates to retain profits from the scheme while investors bear the losses.