Russia’s intelligence service, the FSB, was allegedly involved in the embezzlement of $450 million worth of bitcoins, which went missing from the fund of Russia’s World Exchange Services (WEX), a cryptocurrency exchange, in 2018.
A report last week indicated that a cryptocurrency had mysteriously disappeared from the now-defunct WEX exchange and may have been transferred to wallets owned by employees of the FSB, the feared successor agency to the Soviet-era KGB.
According to an investigation, WEX founder Alexey Bilyuchenko personally transferred the private data of WEX’s clients to the Russian intelligence service, which allowed the FSB to take advantage of the hundreds of millions of dollars in cryptocurrency that the clients had saved on the platform.
WEX was launched in 2017 as a successor to BTC-e, a crypto exchange shut down by the FBI following a money-laundering investigation in which the Americans claimed up to $4 billion of dirty money was sent around the world through the platform.
Fancy Bear, the Russian cyber espionage group behind the hacking of the Democratic Party in the run-up to the 2016 US Presidential Election used BTC-e, according to earlier reports. Wex was also known to have links to top military figures from the internationally unrecognised Donetsk People’s Republic, the Russian-occupied separatist region in eastern Ukraine that has been at the centre of the war between Moscow and Kyiv since 2014.
The BBC’s Russian service later received an audio recording of a telephone conversation from last summer between Bilyuchenko and pro-Kremlin Russian oligarch, Konstantin Malofeev, who is currently sanctioned by the United States. In the recording, the man identified as Malofeev says Bilyuchenko is suspected of withholding some of the cryptocurrency he promised to transfer.
Bilyuchenko also reportedly received threats from the FSB, mentioning that they shout down WEX business if he did not obey.
In April 2018, three days after his calls with the FSB, Bilyuchenko was detained and taken to the Lubyanka, the intelligence agency’s headquarters in central Moscow. After his release, Bilyuchenko told the BBC that he handed over a flash drive with encrypted WEX assets and private data to Russia’s intelligence service, which allowed FSB agents to have access to at least $450 million from WEX users’ wallets.
WEX froze the customer’s funds months later and completely ceased operations at the end of 2018. Bilyuchenko said he was told at the time that WEX’s customers’ money would “go to the ‘FSB Russia fund.’”
Pavel Durov, the Russian founder of the app Telegram who now lives in exile after refusing to hand over to the FSB the personal data of users from Russia’s equivalent of Facebook, Vkontakte, at the height of the War in Ukraine, was reportedly one of the customers who lost an unspecified amount of bitcoin after his data was handed over to FSB.
The former CEO of WEX, Dmitry Vassiliev, was arrested in Italy on the suspicion that he was tied to Alexander Vinnik, a former BTC-e exchange operator who is suspected by the FBI of laundering billions of dollars worth of cryptocurrency. Vinnik was, himself, arrested in Greece back in July 2017 after police alleged that he had laundered at least $4 billion in cash through a bitcoin platform since 2011.
Vinnik’s extradition has been sought by the governments of both the US and France.