Despite Red Flags, Banks Kept Moving Money for Company Involved in Huge Bitcoin Scandal
Russian businessman Sergei Mayzus has spent the past three years on his estates in the Czech countryside breeding livestock, brewing beer, and trying to reestablish his reputation after becoming embroiled in one of the biggest scandals in cryptocurrency history.
His company, MoneyPolo, is a popular online money transfer service that was often used to move funds in and out of Bitcoin exchange platform BTC-e, which collapsed in 2017 after U.S. prosecutors indicted it as a major vehicle for laundering illicit money.
But data from the FinCEN files – a 16-month investigation by the International Consortium of Investigative Journalists, Buzzfeed news and more than 400 other journalists – show MoneyPolo was being red-flagged to U.S. regulators for its unusual business transactions as early as 2010.
In fact, the company behind it, Mayzus Financial Services (MFS), is the most recurring subject in the more than 2,100 Suspicious Activity Reports (SARs) that were leaked.
American prosecutors allege that criminals from all over the world used BTC-e to change traditional currencies for Bitcoins, helping them to clean $4 billion of dirty cash from illicit sources, including drug trafficking, a Bitcoin theft from a Japanese exchange, and Russian hackers.
MoneyPolo helped BTC-e process bank transactions exceeding $100 million through accounts at Czech banks.
Since the scandal broke, Mayzus has been waging legal battles to restore his damaged reputation from his chateau in southern Czechia. He also owns a former manor house, now used as a farm, and used to own another chateau in the mountains where his son could go skiing.
Mayzus told Investigace.cz his current business is “nothing unusual.”
“I brew beer, run an agricultural company and learn the secrets of wine production,” he said.
An investigation by Deutsche Bank’s Americas branch, included in the FinCEN files, found more than $250 million moved through accounts linked to Mayzus’ companies between January 2010 and July 2013.
As of 2016, Investigace.cz’s analysis shows that at least $500 million flowing through Czech bank accounts linked to Mayzus had been flagged as suspicious to U.S. authorities.
MoneyPolo’s former compliance officer, Igor Sergeev, said the company carried out due diligence on its clients and all control measures required by law. “Management … did not believe that btc-e.com was more risky than its other clients from the digital currency industry,” he said.
One back and forth contained in the FinCen Files shows officers at Deutsche Bank’s Prague business reassuring their New York-based colleagues, who were raising concerns about BTC-e operator Canton Business Corporation.
Deutsche Bank’s U.S. office started looking into a company controlled by Russian Alexander Buyanov in 2013, when he sent 10 payments of $1,203 each to a Polish citizen in Warsaw — nine on the same day — for no clear business reason. At the time, Buyanov was reportedly working as a DJ in a Moscow nightclub.
“Do you have any reason to believe that the transaction(s) listed are in any way of a suspicious nature?” a New York compliance officer asked. “We don’t believe so,” the Prague office replied. “Mr Buyanov was verified personally as we had several meetings before deciding to start the cooperation.”
The conversation revealed that Deutsche Bank Prague considered Canton Business to be a legitimate provider of electronic currencies trading services and that its officers “are communicating with the customer on the daily basis (sic)” over operational issues.
The reassurances don’t seem to have been enough, however, and Deutsche Bank New York filed a SAR on 1 April, 2014.
Deutsche Bank declined to comment for this story. “Legal restrictions prevent us and other banks from discussing potential SARs,” said spokesman Tim-Oliver Ambrosius. “Deutsche Bank is actively monitoring for suspicious conduct and shares relevant findings with the authorities.”
The U.S. indictment alleged Canton Business Corporation, which Deutsche Bank reported was linked to Buyanov, was the co-manager of BTC-e’s platform.
In 2018 Buyanov told Russian investigative journalist Andrey Zakharov that he was not involved in the scheme and had never heard of BTC-e exchange. Zakharov told investigace.cz he believed Buyanov and another Russian, Stanislav Golovanov, were just “dropmen” whose identities had been used to hide the real owners of the companies.
But Sergeev, the former compliance officer at MoneyPolo, disagreed. “The company’s opinion, based on evidence, is that Golovanov and Buyanov have definitely been actively helping Mr [Alexander] Vinnik for a prolonged period of time,” he said.
Vinnik, a Russian citizen, allegedly ran BTC-e through companies he owned. He was arrested in 2017 in the U.S. for using the platform to launder some $4 billion, after which all of MoneyPolo’s accounts with Czech banks were closed.
That year Mayzus sued Vinnik and 16 companies linked to BTC-e in Cyprus. The court ruled in his favour, awarding him and MFS over €38 million. Mayzus said he intends to close MFS once he and the company receive the compensation.
Neither Czech police, nor the financial intelligence agents, would comment on whether they investigated Mayzus’ financial companies.