Abu Dhabi financial free zone ADGM's regulators have fined virtual asset trading platform Hayvn Group and its related entities a total of $12.45 million for "serious" rules breaches, while also banning its former chief executive from conducting any further business in the emirate.
A fine totalling $8.85 million has been levied by Abu Dhabi Global Market's Financial Services Regulatory Authority (FSRA), while ADGM's Registration Authority (RA) has imposed fines of $3.6 million, the financial free zone said in a statement on Monday.
The FSRA fine includes a $3.6 million penalty against AC Holding, the Hayvn parent company known as Hayvn Cayman that is registered in the Cayman Islands. The authority also levied a fine of $3 million on AC (Hayvn), an ADGM-based subsidiary of Hayvn Cayman, and $1.5 million against AC Holding, a special purpose vehicle registered with ADGM. Both entities were determined to have carried out "significant unlicensed financial services activity" from October 2018 to May 2024, the authority said. The actions have resulted in the cancellation of Hayvn ADGM's financial services permission.
In addition, a $750,000 fine was slapped on Hayvn Group founder and former chief executive Christopher Flinos, who has also been indefinitely banned from performing any function in a financial services business in ADGM.
Following an investigation, the FSRA said it found "serious breaches and misconduct concerning the operations of three related party companies and Christopher Flinos". Those violations included a failure to manage risks, misinformation and breaking anti-money-laundering regulations.
Meanwhile, the RA also imposed a $3.6 million fine on Mr Flinos and AC Holding for fraudulent trading and misleading investors.
The company founder has been hit by a further $3.3 million fine after he was found to have "facilitated the falsification and provision of hundreds of company documents to fraudulently maintain bank accounts", the RA said. The penalty also includes the banning of Mr Flinos from serving as a director of any ADGM-based company for the maximum allowed period of 15 years, it said.
The RA's penalties on AC Holding include $300,000 for filing false annual accounts and "various" fraudulent schemes, and an additional $15,000 for exceeding the scope of its license in violation of ADGM rules.
"Where non-compliance is identified, the Registration Authority will take effective, proportionate and dissuasive disciplinary action to protect ADGM participants," said the RA's chief executive, Hamad Al Mazrouei. "This includes banning individuals who lack fitness and propriety and pose an unacceptable risk to investors from holding leadership positions within companies in ADGM."
No ADGM client assets or money were lost as a result of the misconduct by Hayvn Group, its related entities and Mr Flinos, the ADGM added.
ADGM, opened in 2015, is home to international banks, insurance houses, global asset managers as well as financial technology and cryptocurrency exchanges. It maintains a strict oversight of companies operating in its jurisdiction.
Last year, it fined Sarwa Digital Wealth (Capital) $122,500 for breaching rules; Baker Tilly $62,500 for auditing failures; and six financial institutions more than $46,000 for contraventions in their reporting.
Prior to those penalties, it also levied a $486,000 penalty on FinTech company Pyppl for breaking anti-money laundering rules and hit KPMG Lower Gulf with a $30,000 fine for breaching audit rules.
