By Andrey Zaharov
July 5th, 2018

DPR: militiaman buys WEX crypto-exchange

Russian cryptocurrency stock exchange Wex with a daily turnover of $20 million. Konstantin Malofeev could be the man behind the deal

Inside a Ritz-Carlton hotel’s very pompous cafe Russe, just 300m away from Kremlin, an RBC magazine correspondent sits down with a man dressed in what looks like a simple t-shirt and a jacket. Four years ago, he, better known as the militiaman Moryachok, participated in the transfer of the Boeing-777-200 flight recorders, downed in the sky over Donbass, to the Malaysian authorities. Not even bothered to take off his machine gun he was just silently taking those recorders out of a white sugar carton, while media was filming DNR Prime Minister at the time, Alexander Borodai’s, speech.

During conversation, Moryachok, whose real name is Dmitry Havchenko, constantly hides his right hand behind the back of the chair: he lost two fingers at war in East Ukraine. Now he is a beginner crypto entrepreneur. Havchenko talks about buying the Wex exchange – the legal successor of BTC-e platform, the one that crumbled upon Alexander Vinnik’s arrest in Greece at the request of the US Justice Ministry.

BTC-e exchange operated from 2011 to July 2017 being largest Russian-language platform to buy and sell cryptocurrency. According to the RBC earlier post, its creators skilfully hid behind the nicknames dev and support, revealing just the latter’s first name – Alexei. The history of the exchange, whose peaking daily turnover reached $ 66 million, ended in disaster. Fulfilling the request of the US Justice Department, on July 25, 2017, Greek police detained a Russian Alexander Vinnik on the beach of Chalkidiki peninsula as the US authorities named him one of the BTC-e leaders.

At the same time, FBI paid a visit to the New Jersey data center arresting all the  servers, what lead to the exchanges complete inability to work. Accused of laundering from $ 4 to $ 9 billion, Vinnik may face up to 55 years in the US prison.

Mid-September saw a birth of a new exchange Wex.nz. Not only did it bluntly resemble BTC-e in design and functionality, but they impaired obligations to the customers of the crashed platform. The official operator of the exchange is a Singapore company called World Exchange Services. Its only founder Dmitry Vasiliev is a 31-year-old born in Minsk. Moreover, he was the original owner of the Wex.nz domain, according to the Singapore registry and WhoIs service data. Vasiliev used to live and study in St. Petersburg, but a trip to China in 2012 got him carried away with crypto-currencies. As two of his close acquaintances told RBC, during the last months of BTC-e, Vasilyev was one of the biggest customers of the site, trading for his Chinese partners interests: he managed up to a third of overall daily volume.

After the collapse of BTC-e, Vasiliev contacted one of its founders, a mysterious programmer named Alexei, known to clients under the nickname “support”. “He wrote him and offered his services to restart the exchange,” according to one of Vasilyev’s acquaintances. “Alexei agreed upon a couple conditions: solve problems with BTC-e customers and help get Vinnik out”, adds another.

BTC-e came to life under a new name, having managed to quickly regain some of its users. Clients got as much as $ 500 million worth of their crypto-currency assets back from information left on backup servers, RBC magazine wrote back in December, 2017. Fiat balances, or traditional money used to buy bitcoins, “ether”, etc., were changed to Wex-Tokens (equivalent to $ 200-400 million), that the headship promised to redeem within a year with the help of profits from the website activity. By the end of 2017, Wex trading daily turnover was about $ 80 million, putting the exchange among top 20 largest crypto exchanges in the world (according to Coinmarketcap).

Parallel to the exchange launch Vasiliev fulfilled the second condition and contacted Timofey Musatov, Vinnik’s lawyer. As a result, Vasilyev was brought as an expert to address the court in Thessaloniki considering the case of Vinniks extradition to the United States. According to one of Vasilyev’s close acquaintances, due to Musatov, Vasiliev gradually entered the circle of conservative Russian IT entrepreneurs, who advocate for the strict sovereignty of  Russian Internet. That lawyer is Natalia Kaspersky business partner. He was the one to lead the deal selling her stake in Kaspersky Lab and helped to rescue her son Ivan, who was kidnapped in 2011, according to Kaspersky husband and a businessman Igor Ashmanov.

Vasiliev sought support for his project in this circle, realizing that without influential patrons he would not be able to work in Russia, says one of his acquaintances. “He was looking for certain protections his stock exchange,” says the other, putting it more precisely. Finally, he found support from the owner of “Tsargrad”, one of the Secure Internet League founders, Konstantin Malofeev – argue the interlocutors of the RBC magazine. Talking to the magazine, Musatov did not confirm acquainting Vasiliev with Malofeev, but added that, according to him, the head of Wex was really looking for powerful supporters.

“As far as I know, he found it,” he summed up. Vasiliev himself refused to comment on the issue.

Trying to understand who is now behind the exchange, RBC correspondent introduced himself as a man who urgently needs to buy bitcoins for a quarter of a million dollars.

Dmitry Havchenko (c) Evgeniy Gurko

Royal crypto exchange

In the spring of 2018 similar messages started to spread on crypto forums. They were all from the user “artemcrpt” who offered to sell any desirable volume of wexcode in Moscow. Wexcode – a set of symbols that allows you to purchase cryptocurrency at the Wex exchange for cash. The transaction mechanism is as follows: one trading platform user generates the code, passes it to another, they enter it into the system, and bitcoins or “ether” go to their wallet. Using this system, the transfer itself occurs outside the exchange, while with a standard purchase in dollars, euros or rubles, you first need to somehow get into Wex through a bank or payment system.

RBC correspondent found artemcrpts profile on “VKontakte”: the man behind the nickname turned out to be Artem Karyanov, born in Perm but living in Moscow. Under disguise as a potential client, the journalist asked where the deal would take place. Karyanov confirmed that he works for the Wex exchange, and said that at when the deal concerns large volumes the meeting is appointed at business and shopping centre “Novinsky Passage” located on the Garden Ring, Moscow. It is there, on the fifth floor, that Konstantin Malofeev’s “Tsargrad” have their office, as confirmed by the management company Novinsky Passage.

The meeting itself was supposed to be held not with Karyanov, but with his acquaintance and another Permian, a venture investor and vice president of Russian Crypto-Currency and Blockchain Association Dmitry Sutormin. According to the legend, the journalist wanted to buy bitcoins for $ 240 thousand in the interests of partners who asked to have their representative carefully examine the place of the deal, before the transaction. For these purposes, Sutormin connected the RBC correspondent with a young man named Ivan.

Ivan, dressed as a young man with a wide visor cap, scheduled a meeting in a cafe on the first floor of Novinsky Passage, warning that he would first have to check his passport. That took not more than a minute: Ivan messaged someone correspondents personal information, then concluded – you can go. Finally, he carefully studied the photo and touched it to see if it’s glued.

Ivan led the correspondent to the the very end of the long corridor of the last floor in the 8 story high business center. Entering an empty room you could only see a table, two chairs and an impressive sized machine for counting bills. “You count the money, we receive the code, enter it and part ways?” – the correspondent went through the process of buying cryptocurrency. Ivan nodded, then warned: more than two people won’t be allowed in. Before leaving, the journalist told his companion that there is Konstantin Malofeev’s “Tsargrad” office on the fifth floor of the Novinsky Passage, and according to the rumor being spread around in crypto community, the company has something to do with Wex. “I won’t tell you any specifics, but you’re good, you even surprised me a little,” Ivan laughed.

After visiting the office, RBC correspondent contacted Dmitry Sutormin once again, but this time already as a journalist. He said that he exchanged his “personal codes”, although previously affirmatively answered the question about his relation to Wex and promised to raise the daily withdrawal limits if necessary. Why he decided to sell his codes in the office of Novinsky shopping arcade, Sutormin chose to not clarify. Someone from Vasilyev inner circle, assumes that his business partner and another Permian, Evgeny Zhulanov, could have joined the exchange together with Sutormin. Zhulanov had a joint project with Konstantin Malofeev – the provider of mobile content Nikita. According to RBC, back in 2014 Zhulanov purchased the partner’s share. He did not answer the questions sent to him through a representative.

RBC correspondent repeatedly yet unsuccessfully called Konstantin Malofeev, later to address his question via WhatsApp. The businessman read the message, but never answered. Moreso, an hour later a man called the city number of the editorial office, introduced himself as Sergei and offered to discuss the situation about the Wex exchange with Dmitry Havchenko, Donbas militiaman, that goes under the name Moryachok.

Alexander Vinnik (c) Petros Giannakouris / AP

“Moryachok” millionaire

After the collapse of the Soviet Union, a 52-year-old Crimean, Dmitry Khavchenko, lived and worked in Kiev. According to him, during the 1990s and the first half of  2000s he worked in the company “Itera”, that supplied Ukraine with Russian gas. For some time he even occupied a position of the head of the Itera debt management department. In 2007, he headed the Kiev firm RosUkrstroi, the affiliated undertaking of the Russian SU-155, according to the data from the Ukrainian contractor verification service YouControl. In 2012, a criminal case was filed accusing him of fraud. Havchenko himself ensures that the claims from law enforcement agencies arose after his quarrel with a “high-ranking partner.” On the website of the Ministry of Internal Affairs of Ukraine, Havchenko is still on the wanted list for fraud, but this hardly bothers an active participant of the “Russian spring”.

In March of 2014 Havchenko was a part of the “Crimean militia”. Later in May he crossed the border and went to fight in Donbass, having picked the name Moryachok, as he told RBC. Then I met Alexander Boroda, a Russian political technologist, prime minister of the People’s Democratic Republic from May to August 2014, and a former adviser to Konstantin Malofeev. “Friend” and “war comrade” – that’s what Borodaya calls him, but he does not disclose the details of his stay in Donbass. In August of 2014, he was wounded and as a result lost two fingers. In 2015, Khavchenko headed the Crimean branch of the Volunteers of Donbass Union, lead by Boroday.

Havchenko assures us that he got carried away with crypto-currencies before the Donbass war. He believes blockchain technology makes it possible to transfer money to all the unrecognized republics, bypassing the sanctioning dangers, not only in the DNR and the LNR, but also in Transnistria, South Ossetia and Abkhazia. At the end of April 2018, Havchenko signed a letter of intent with Dmitry Vasilyev  according to which both parties have previously agreed to sell the Wex stock exchange. “Vasiliev was a manager in Wex. Due to various force majeure events that occurred with the exchange, he acquired the right to sell it. Whereas we want to buy it,” he explains.

Havchenko refused to name the preliminary transaction amount, however, one of Vasiliev’s interlocutors speaks of several million dollars. A former militiaman assures that money reserved for the purchase are solely his and there is absolutely no intent to take loans from either “Tsargrad” or from any other structure; moreover, he claims he has nothing to do with “Tsargrad”. If the deal is completed, the exchange team will move to Crimea and the management company will be re-registered somewhere in one of the unrecognized republics. Havchenko also intends to resolve ownership issues with one of the BTC-e founders, mysterious Alexei, who lives somewhere in the Far East. “There will be no more secret owners. I decided to become a crypto millionaire, ” concludes Havchenko.

Vasiliev confirmed the fact of holding talks and making no personal remarks said that the relationship with partners have reached a deadlock and starting from January he will no longer participate in the management of the stock exchange. “I plan to sell it and invest myself in other projects,” he said. According to one of Vasilievs interlocutors, his team was gradually pushed by other people connected with the new patrons of the project. One of Wex major clients claims that he has previously solved his account problems with people connected to “Tsargrad”.

Havchenko confirmed that he now has “some influence” on the current work of the exchange, but it is not enough: token purchase obligations are not met, since the beginning of the year the trading volume fell to from $ 100 to $ 20 million per day and it’s not just a matter of lowering the cost bitcoin – Wex did not hold its position in the largest sites ranking and dropped out of the top twenty down to the middle of a hundred (according to Coinmarketcap). Moryachok believes that this is due to the CEO personality: he considers Vasilyev to be a good startupper, but a bad manager. After the purchase, he promises to make Wex “a powerful and patriotic project.”

The original article was posted by Andrey Zakharov for RBC