Polish police confirm WEX owner arrest as $29M in related ETH move for first time

Polish police confirm WEX owner arrest as $29M in related ETH move for first time

September 22, 2021

Authorities in Poland have confirmed the arrest of the man who operated WEX digital currency exchange. The exchange, which was the successor of the infamous BTC-e, reportedly went down with over $400 million in investor funds. Following his arrest, Ether that has been held in a wallet linked to the exchange moved for the first time in years.

Dmitri Vasiliev has been rumored to be in the custody of Polish authorities for close to two months now, although it wasn’t until last week that Polish paper Gazeta Wyborcza reported the news. Early this week, a representative of the District Prosecutor’s Office in the capital of Warsaw confirmed the arrest to Russian news agency RIA Novosti.

According to the representative, authorities in Poland worked with Interpol on the arrest. Vasiliev was arrested in an airport in Warsaw and he faces possible extradition to Kazakhstan where he is expected to be charged with fraud over his involvement in the now-defunct WEX.

Vasiliev headed WEX, an exchange that sprung up to fill the void left by BTC-e, yet another infamous exchange that has landed Alexander Vinnik in French prison for five years.

At its peak, WEX was the largest exchange in Russian-speaking nations, with reports putting its daily transactions volume north of $80 million. However, it halted withdrawals in 2018, and shortly after it went offline. At this time, the exchange was sold to Dmitry Khavchenko, a Kyiv-based entrepreneur who has now become a separatist fight in Eastern Ukraine.

According to local reports, WEX went down with about $450 million worth of investors’ money. Vasiliev was alleged to have personally made away with about half the money.

WEX mystery, BTC-e ties, and Kremlin links

However, the disappearance of the WEX funds is much more complex and mysterious. For one, there are claims that while Vasiliev was the figurehead at the exchange, there was another man in the shadows who had just as big a say—Alexei Bilyuchenko. 

While his name isn’t all that popular, it was he who partnered with Alexander Vinnik to start BTC-e. In fact, when Vinnik got arrested in Greece, Bilyuchenko was in another part of the country smashing his laptop to pieces and seeking the next flight back to Russia.

Bilyuchenko would later tell BBC Russia that the funds that disappeared from WEX exchange went to the FSB, Russia’s principal security agency and the successor to the infamous KGB. He said that the FSB agents forcefully stole the funds and transferred them to their own accounts. He linked the money to a Russian billionaire who was closely tied to the Kremlin.

After the news of Vasiliev’s arrest was confirmed to RIA Novosti, an Ethereum wallet that’s tied to the defunct WEX exchange moved 9,916 ETH, valued at $28.9 million at press time. The transaction has yet to be processed, however, as whoever attempted to move the ETH put in a maximum transaction cost of $1.23. The Ethereum network charges higher fees than this and the transaction has been pending for the past two days. 

According to YCharts, the average transaction fee for Ethereum transactions stands at $3.87 at press time. This is way above the average fee on the Bitcoin SV network which stands at $0.001. 

The ETH is being sent to a wallet hosted by Binance, an exchange that has become notorious for links with illegal outfits. Binance has been accused of processing cash outs for money launderers as well as ransomware proceeds.

In October 2018, Binance froze accounts that received over 93,000 ETH from digital wallets that had ties or were directly owned by WEX exchange. At press time, this ETH is worth over $268 million.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—a from BitMEX to BinanceBitcoin.comBlockstreamShapeShiftCoinbaseRipple and 
Ethereum—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.

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