ESports investor Trig Social Media had their Stockholm offices raided by authorities in relation to their investigation for stock market fraud and financial impropriety. The raids are the latest chapter in a lengthy tale of delusions of grandeur, lies, and ultimately failure since Trig announced their involvement in eSports in December 2014.
The reports of the raids appeared in the Swedish business publication realtid.se yesterday, with four locations reportedly being visited by investigating officers. No arrests were made at this time.
Trig originally swept into eSports by announcing sponsorships for some of the bigger names in multiple titles, including Starcraft’s Jang “MC” Min Chul and Enrique “xPeke” Cedeño’s League of Legends team Origen, who made the semi-finals of the World Championships this October. Shortly after, they started making some very bold claims, such as stating they were developing their own eSports television network that they said would reach 450 million viewers via satellite distribution and a Smart TV app. As of now they seem to be no further toward this becoming a reality.
It is tall tales such as these that seem to have contributed to their ongoing legal troubles. The core business behind Trig consists of a portfolio of derivative social media products that were boasted about by their COO Phillip Cook in a now-deleted video for investors dating back to August 2014. These include trig.com, their equivalent of Facebook, and HeyHey, a Whatsapp clone. In the video, Cook claimed that the site was receiving a million unique visitors and growing; auditors have found this traffic to be a whole lot less.
These bogus claims take on a specific legal ramification due to the fact that Trig have floated on the Frankfurt stock exchange in September last year, opening at a value of 5m Swedish Krona ($578,000) but rose to 10bn Krona ($1,182,000,000) in only six months. This rise was based on investor confidence, which now seems to be predicated on a series of misrepresentations by Trig.
Their own auditors, PwC, effectively drew attention to this when they stepped down from their duties, stating, “Trig Social Media has on a repeated number of occasions emphasized the importance of their member database of more than 3 million members. Our analysis has revealed that the company has a very low proportion of active members that generate revenue.”
It wasn’t long before what was happening in the background started to seemingly impact the eSports division. Jang “MC” Min Chul retired, and Trig’s Hearthstone division left the organisation, claiming they were owed tens of thousands of dollars in back salary this August. It isn’t clear if there have been any issues with the Origen team at this time. What is clear is that the raids confirm that the problems with Trig aren’t going away any time soon.