Crypto exchange WEX founder claims Russia intel forced $450M forfeiture

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In a new twist to the cryptocurrency exchange Wex’s story, the founder of the exchange claims that all the blame lies with Russian intelligence forces. Alexei Bilyuchenko has revealed that he was forced to forfeit the cold wallets that contained the users’ funds to the Federal Security Services (FSB), the principal security agency of the Russian Federation and the successor to the KGB.

Bilyuchenko was close friends with Alexander Vinnik, the embattled founder of BTC-e, which was shut down by the FBI in relation to money laundering, and Vinnik was accused of laundering over $4 billion. According to a BBC Russia investigative report, Vinnik was with Bilyuchenko in Greece when the former got arrested for his role in BTC-e.

After the arrest of Vinnik, Bilyuchenko fled to Russia and together with seasoned crypto trader Dmitri Vasilev, he founded WEX, using the database of BTC-e users. WEX took off, with most of the former BTC-e users taking to the new platform. However, after some time and for unknown reasons, it slumped quickly. Vasilev then revealed that he was selling WEX to Dmitri Khavchenko, a former militia fighter with links to high-ranking members of the Russian government.

Before the 2018 collapse of the WEX exchange, Bilyuchenko revealed that he was in talks with Konstantin Malofeev, a Russian oligarch with close connections to Kremlin. Malofeev is reported to have been interested in the WEX users database, which he intended to use to create a new crypto exchange which would be regulatory-friendly. The BBC report claimed that Malofeev used the FSB to pressure Alexei into handing WEX data to him.

Bilyuchenko told investigators that in 2018, two FSB officers by the names Igor and Gregory forced him to hand over the hard drives containing the user data. The two officers visited him severally in late 2018, taking him down to the FSB headquarters regularly to pressure him to comply. In the end, they obtained the information they needed and transferred over 30,000 BTC and 700,000 Litecoins, worth around $350 million from the exchange’s wallet to their own wallets.

The Russian police and the FSB declined any requests for comments from the BBC on the same. Malofeev, on the other hand, dismissed the report stating, “Given the biased nature of questions based on fabricated materials, there is essentially no point in answering them.”