The Sordid Tale of Woe Behind the WEX Exchange - Bitsonline

The Sordid Tale of Woe Behind the WEX Exchange

The WEX cryptocurrency exchange has suspended withdrawals since July 2018. The exchange continues to operate and offer unbelievably high prices to attract new customers. Getting funds out is where the problems begin.

Also read: New Dawn: Treasury Dept. Levies Bitcoin Address Sanctions

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WEX: Why Entrust X-Changes With Your Money?

Currently, withdrawals from WEX are only available in Zcash with a staggering 75 percent fee. There have been reports from people who withdrew $15,000 USD worth of ZEC to receive only $3,750.

The withdrawals of BTC, ETH, LTC, BCH, ETC, and other main cryptos have been suspended since July 12th, 2018.

BTC-e, WEXnz, and WEX.link – All Frauds?

A quick look at the WEX.link exchange reveals a pseudo-market, pricing BTC at around $8,000 and ZEC around $1,400.

According to this forum thread, WEX owner Dmitrii Vasilev and his partners have managed to maintain the scam website for several months without significant media exposure.

The screen shot below was taken in a popular Russian news Telegram channel. The message says that Dmitrii Vasilev is a well known “piece-of-shit” gambler with lots of poker debts and many enemies in St. Petersburg.

Vasilev and Zhuhovitsky

“After hiding from his creditors in a madhouse, he now buys WEX accounts for 20% of their value using his shadow partner and London School of Economics graduate, Mikhail Zhuhovitsky (Михаил Жуховицкий). The other 80% of the money is used to give cash to former VIP-investors who have threatened to kill him and can prove their intentions.”

The author notes that back in 2017, Vasilev was recognized as bankrupt by the Russian United Federal Bankrupt Agency on July 18th.

Vasilev answered investor questions in a video recently posted by CoinRadio behind a Mac and three or four mobile phones (PRIZM and WEX labels remain on the computer).

During the interview, Vasilev claimed that:

  • He is not escaping by moving to some secret place outside of Russia
  • The person now draining WEX’s cold storage of funds is Dmitrii Sutormin (Дмитрий Сутормин), the current RACB Vice President
  • Vasilev himself is available for personal meetings for one bitcoin
  • He is ready to visit anyone on the planet for just 10 bitcoin

Dmitrii Sutormin’s Large Volume Trading

After the news about Zhuhovitsky and Vasilev leaked to the Russian Telegram press, a series of ETH transactions were sent from WEX’s cold storage.

Sutormin works for the Russian Association of Cryptocurrencies and Blockchain (RACB or RAKIB or РАКИБ). Vasilev has previously stated that during the summer of 2018 Sutormin had access to the exchange’s back end and generated un-backed WEX codes.

Interestingly, Sutormin claims that he has no intention to file a lawsuit against Dmitrii Vasilev because Sutormin’s “clean reputation” speaks for itself. But before the latest RACB media rampage, he was an unknown person among OG Russian bitcoiners.

The FBI’s Most Wanted Hacker Involved?

How did Vasilev jump onto this train?

After the BTC-e take down by the FBI back in 2017, Vasilev made contact with one of its founders — Alexei B., a mysterious coder known as “support” in the BTC-e chat.

“He wrote Alexei and offered his service in the exchange rebuild” says one of Vasilev’s friends. Alexei agreed, while asking to help organize Vinnik’s liberation.

According to the PrivateFX forum, Alexei B. could be Alexsey Belan, one of the FBI’s most wanted hackers with an outstanding $100,000 bounty for any information that could lead to his arrest. It is widely thought that he has been a long-term hacker, and former WEX traders call him “the red admin.”

The FBI site says that his last known residence was Krasnodar, Russia. But the PrivateFX forum tells us that Belan was last seen in northern Cyprus. U.S. government agents suspect him of conspiracy along with two Russian FSB agents. His crime was hacking major American corporations like Yahoo and the theft of client databases.

Per the FBI’s website:

“Belan allegedly stole the user data and the encrypted passwords of millions of accounts and then negotiated the sales of the databases.”

Who’s Defending Vinnik?

Alexander Vinnik’s lawyer was Timofey Musatov — a business partner of Natalya Kaspersky from companies like Infowatch Assets Management and Kaspersky Lab.

During 2012-2013, Musatov defended Dmitrii Zubaha, who was arrested in Cyprus at the request of U.S. authorities. However, he was extradited to his homeland and was given three years of parole instead of a real sentence.

Vinnik’s case moves on the same rails. Three weeks after the Greek incident with the arrest, the Ostankino district court issued a fake extramural arrest order. According to Interfax, in May 2018 Vinnik voluntarily surrendered to Russian officials. He claimed:

“As a result of my BTC-e related fraud activity from 2011 to 2017, an unknown group of people apparently lost 750,000 million Rubles.”

Andrey Zaharov’s Own Investigation

The RBK investigation conducted by Andrey Zaharov sheds even more light on the scandal. On July 4th, 2018, eight days before all withdrawals were suspended from WEX, he pretended that he wanted to buy $240,000 in WEX codes.

Zaharov put a lot of time into finding a man who’s name was Dmitrii Sutormin. Sutormin wrote that, in the case of big deals, clients should come to “Novinsky Passage,” a trading center on the Garden Ring Road in Moscow.

The journalist met a guy named Ivan. Ivan set the meeting in a café on the first floor of Novinsky Passage. There, Ivan looked into the documents and lead Zaharov to the 8th floor to a small room with a large cash-counting machine. All for VIP clients only.

Novinsky Passage
Novinsky Passage

When leaving the building, the journalist said to Ivan:

“Did you know that there’s an office of the Tzargrad company on the 5th floor of the building? The company is under Constantin Malofeev’s management. Rumors in crypto circles said this company is somehow connected with the WEX exchange.”

“I won’t tell you anything now, but you’re a clever guy,” the mysterious Ivan answered, laughing.

“You impressed me, but not much.”

After that, RBK’s Zaharov contacted Sutormin as a journalist. He responded that he and Ivan were exchanging their own codes. But earlier he claimed that he worked for WEX and even promised to raise the daily WEX withdrawal limits. He didn’t answer why he decided to sell his codes in Novinsky Passage and denied having connections with WEX.

One of Vasilev’s friends says that Sutormin could be a WEX partner, given the relationship with Evgeniy Zhulanov, a friend of Constantin Malofeev, Tzargrad’s owner.

Pro-Russian Donbass Fighter Wanted To Buy WEX, Move It To Crimea

Adding another layer of intrigue, there is a person who wanted to buy the WEX exchange in July 2018.

Dmitrii Havchenko BTC-e WEX

Dmitrii Havchenko is a member of the General Prosecutor’s office special forces in the self-proclaimed Donetsk People’s Republic (DPR) in the east of Ukraine. He was the deputy of the “Novorissia Parliament.”

The Ukrainian Ministry of Internal Affairs put Havchenko on a WANTED list for committing financial crimes. But for the “Novorossia” hero, this may not be a big problem anymore.

Havchenko’s personal data leaked to the FXforum under an interesting line: “WEX case suspects”. So, has the case already been opened by the Russian police?

After suspending withdrawals on July 12th, Vasilev tried to sell the shady exchange on the 25th. Havchenko refused to buy it because of the obvious withdrawals freeze.

Later, Havchenko stated that he wanted to buy “another exchange,” pointing to EXMO. He stated that he was in the process of negotiations with EXMO, but their representative declined this. Per EXMO co-founder, Ivan Petruhovsky:

“There are no offers at the moment. We do not negotiate with anyone.”

Havchenko may have been connected with Constantin Malofeev from the Tzargrad channel through Alexandr Boroday.

Boroday was a prime minister of pro-Russian DPR military separatists in Eastern Ukraine. He previously consulted Malofeev in politics and served as a direct boss of Havchenko.

Wex-scam.com

The strange site wex-scam.com was created in September 2018 to fight former WEX admins for the stolen money.

More than 44 people have filed an online request with the Russian Ministry of Internal Affairs. If you had assets with WEX and want to file a request, consider asking for help from the FBI, Europol, and your local authorities first.

Here are the contacts of the so-called WEX initiative group:

https://twitter.com/WexScam

https://t.me/wexiniciative

https://t.me/wexcodes

email admin: [email protected]

Do not send your personal data to this website admin!

As a result of actions of this group, a series of domains were recently confiscated from Vasilev, including wex.nz, wexbet.nz, and others. Vasilev apparently moved on to another anonymous domain: wex.link. In early December 2018, that link was confiscated too.

Wex-scam.com, as well as their Internal Affairs filing, may be a one more way to procrastinate and distract your attention. Interestingly, Wex-scam is involved in a number of RACB discussions, including the latest news.

It’s strange that RACB representatives suddenly decided to help. They didn’t show any interest in the suspected WEX scam activity before. Despite appearing at almost every blockchain conference in Russia this year, Sutormin’s dark personality casts a shadow on the previously positive media coverage

How Russian WEX Exchange Appeared To Be 100% Fraudulent

If you have any questions or suggestions on this piece, let us know in the comments below.


Images by Jeff Fawkes, Pixabay, FBI, Telegram

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