Arbitrade Ltd’s claim to have ‘title’ to more than $15 billion of gold bullion has been supported by a company that is acting as its precious metals procurement agent.
A representative of Sion Trading FZE told The Royal Gazette: “I can’t speak on behalf of Arbitrade, but Arbitrade has title to it [the bullion], end of story. I don’t know what the contract or deal between it is, but they have ownership of it.”
In October, a subsidiary of Arbitrade acquired the $6.5 million Victoria Hall office block on Victoria Street. The vacant building will be the global headquarters for the cryptocurrency exchange and coin company.
Len Schutzman, chairman of Arbitrade, said last month the company had title to 395,000 kilograms of bullion, a total that would be worth $16.2 billion in today’s rising gold market.
The company will use the bullion to back a number of cryptotokens it has planned, including one called “dignity” that is in circulation.
However, Arbitrade has not said who has given it title to the gold and under what conditions, nor where the gold is, or the name of the “independent public accounting firm” that it says has verified the account. It has stated the reason for this is because it is legally bound by non-disclosure and privacy obligations.
In June, Sion Trading FZE of Dubai was identified in a conference call by Arbitrade as “one of the only licensed gold traders on the Dubai Gold Exchange,” and as its partner in securing title to what at the time was said to be $10 billion of gold.
The bullion was to be audited by “a major auditing firm that operates in Bermuda, Dubai and the US”, and be stored in a Brink’s vault in Dubai. As Arbitrade paid off the bullion debt, through revenue from cryptomining operations, the gold would be shipped to a vault in Bermuda.
Subsequent checks by The Royal Gazette showed that Sion Trading was not a member of the Dubai Gold and Commodities Exchange and had no affiliation with it. It holds a commercial licence in the Ras Al Khaimah economic zone of the United Arab Emirates, where its activity is listed as trading non-manufactured precious metals. Its address is a “flexi desk” at the Rakez Business Zone.
Sion Trading is a subsidiary of Scotia International of Nevada Inc, a mining equipment supply company based in Salt Lake City, Utah.
Two weeks ago, Sion Trading announced it had secured a precious metals contract with Don David Gold Mexico to purchase “metal dore” from its Oaxaca Mining Unit. It said it planned to allocate precious metals, including those bought from Don David Gold Mexico “to further enhance Arbitrade’s existing gold assets”.
In a press release, a member of Sion Trading’s senior management, said: “We are pleased to support Arbitrade with precious metals procured from respected mining companies and known sources.”
When contacted by The Royal Gazette, a representative for Sion Trading, who verified their position but asked not to be identified for security reasons, said Arbitrade’s gold deal was “doable”.
He said: “Sion Trading has already put together that gold for Arbitrade. They are utilising that as of now. There is gold from Gold Resources, and there is a bunch of other clients coming on board. Gold miners are very private people and they don’t really announce what they have going out.”
Arbitrade has said an independent public accounting firm has confirmed the Safe Keeping Receipts totalling 395,000kg of gold.
Regarding the use of SKRs, the Sion Trading spokesman said: “The SKR gives you ‘title’ to your bullion, and part of that receipt is the genealogy behind it, which people don’t generally give out because there are a lot of security issues pertaining to it. You don’t want to put a sign outside your door and say you’ve got gold in your safe and you go to work nine-to-five.”
Don David Gold Mexico is a wholly owned subsidiary of Colorado-headquartered Gold Resource Corporation.
The Royal Gazette contacted Greg Patterson, vice-president corporate development at Gold Resource Corporation, to confirm the details of the Sion Trading press release regarding the precious metals contract with Don David Gold Mexico. He confirmed it was accurate and also pointed out the final paragraph, which stated that Don David Gold and Gold Resource Corporation, its subsidiaries and affiliates “disclaim any responsibility for the adequacy or accuracy of this release, including any or all proposed plans that Sion Trading has or may have relating to precious metal dore sold to Sion”.
It also said: “Gold Resource Corporation and its subsidiaries have no affiliation to any company or entity referenced in this release beyond the sale of dore to Sion Trading. Furthermore, Gold Resource Corporation and its subsidiaries are not affiliated with and have no direct or implied association with any cryptocurrency.”
Arbitrade has said it will back each of its three billion dignity tokens with $1 worth of gold. The token peaked in value at about 29 cents in May, but has declined and is now valued at less than ½ cent per token on CoinMarketCap.
The Royal Gazette has asked Arbitrade a number of questions, including a request for more clarity on the gold deal. A representative for Arbitrade has confirmed the questions are being dealt with.