Russian FSB linked to disappearance of $450 million in crypto

A BBC investigation has claimed that Russia’s FSB intelligence agency may have played a role in the disappearance of $450 million worth of crypto from the Wex exchange.

The Wex exchange, previously known as BTC-E, collapsed in 2018 after user wallets were frozen last July, with many claiming the exchange’s founders had pulled an exit scam.

However, a BBC Russia investigation has revealed that the exchange may have been at the centre of a much more sinister plot orchestrated by FSB officials, whose ex-officer Anton Nemkin allegedly seized keys to the exchange’s cold wallets.

FSB officer demands funds

Following the arrest and questioning of the exchange’s co-founder Aleksey Bilyuchenko, FSB officers reportedly demanded that private keys granting access to the exchange’s cold wallets were handed over.

The private keys to the cold wallets, containing an estimated $450 million in various crypto-assets, were allegedly kept on Bilyuchenko’s person, who after relinquishing control of the wallets was interrogated for 40 minutes regarding his role at the exchange.

Bilyuchenko was then allegedly held under FSB guard for two days in a hotel in Moscow.

The story is partly confirmed by movements of Bitcoin and Litecoin from the exchange wallets, which were transferred on May 16. Over 30,000 Bitcoin and 700,000 Litecoin were transferred from known Wex wallets.

FSB yet to comment

The FSB and the Ministry of Internal Affairs are yet to issue a response to the BBC investigation. However, a source told BBC journalists that if the FSB had in fact engaged in the illegal seizure, it was a “shameful story”.

However, the source also pointed out that officers involved in the scandal could have been acting independently under the guise of an official investigation, or Bilyuchenko may have fabricated the story to cover up his own exit scam.

The web domain of BTC-E, the original trading name of the Wex exchange, was seized by US officials after a warrant was issued by the US District Court of New Jersey. Officials in the US maintained that BTC-E was an illegal exchange which facilitated anonymous crypto trading for cyber criminals.

Bilyuchenko had no comment for the BBC investigators, claiming he was under state protection as a witness and was legally unable to comment on the case.

Coin Rivet reported in January that Putin had personally intervened in the arrest of Bilyuchenko’s partner, Alexandr Vinnik, to have the fugitive extradited to Russia.