Russia’s Federal Security Service (FSB) has been linked to the disappearance of $450 million in bitcoin from the controversial crypto exchange World Exchange Services (WEX).
Controversial Exchange WEX/BTC-e
In late 2018, Russian-based crypto exchange WEX collapsed amidst accusations of money-laundering the disappearance of hundreds of millions of dollars in bitcoin and other cryptoassets. According to a BBC report published Nov. 15, the Russian FSB intelligence agency may have played a role in misappropriating the lost funds.
WEX was previously known as BTC-e before being shut down in 2017 by international authorities for its alleged involvement in money-laundering activities. Alexander Vinnik, the exchange’s alleged operator, was arrested at the time and accused of laundering more than $4 billion in cryptocurrency since the exchange’s launch in 2011.
A PwC report earlier in the year said,
WEX is most notably known for its alleged involvement in the laundering of some $4 billion, transferring of funds to facilitate operations of the threat actor tracked by PwC as Blue Athena, and being responsible for cashing out 95% of all ransomware payments made since 2014.
FSB Crypto Fund
According to the BBC report, WEX/BTC-e co-founder Alexey Bilyuchenko says he was forced to hand over information about customer’s digital wallets to members of the FSB in 2018, which the intelligence agency allegedly used to obtain more than $450 million in user funds.
The BBC claims to have obtained audio recordings from individuals discussing the importance of bringing WEX under FSB control, including one man the BBC identifies as Konstantin Malofeev, a pro-Kremlin Russian billionaire currently under U.S. sanctions.
Bilyuchenko reportedly received multiple calls threatening to close the WEX exchange if he did not comply. According to the report, the WEX co-founder was taken to FSB offices in Moscow over the course of three days in April 2018, where he handed over flash drives containing details on accessing exchange user funds.
Bilyuchenko says he was told that WEX client money would be transferred to the “FSB Russia Fund.” Several months after handing over the data, WEX froze customer funds and withdrawals, before completely shutting down in late 2018.
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