Crypto exchange WhiteBIT 'scammed' clients and got involved in another Russian money-laundering scandal

Crypto exchange WhiteBIT 'scammed' clients and got involved in another Russian money-laundering scandal

“They scammed Wall Street — what a surprise,” says the heroine of the film Dump Money, which was released in September 2023 and tells the true story of small investors fighting the moguls of an American exchange. That film intertwines with the situation that occurred on 21 November this year with the Ukrainian exchange WhiteBIT. It turned out that the exchange operators were able in a single day to “scam” their investors out of very large sums, confirming their reputation for unreliability and scandalousness.

Photo from Volodymyr Nosov’s Facebook page

WhiteBIT positions itself as a Ukrainian exchange, founded in 2018. Its leader, at least its official media face, is Volodymyr Nosov. His business partners at the time of founding were Mariia Repeshko, Anna Yankovska, and Mykyta Shentsev. The latter is a former deputy of the Kharkiv Regional Council from the banned Opposition Platform — For Life, and his father, Dmytro, is a former member of the Verkhovna Rada from the same pro‑Russian OPZZh.

Dmytro Shentsev resigned his mandate in September 2022, after 7 months since the full‑scale invasion of the Russian Federation into Ukraine. According to media reports, both Shentsevs are now in Russia. The younger Shentsev was stripped of Ukrainian citizenship earlier this year.

Officially, Shentsev and Repeshko sold their shares in WhiteBIT to Volodymyr Nosov in March 2023. But insiders continually claim that the Shentsev family remains a beneficiary of WhiteBIT’s revenues and helps funnel Russian money through the exchange.

On 21 November a long‑awaited event was scheduled for participants in the cryptocurrency market. WhiteBIT announced the start of sales of a new coin — WorldToken (WORLD), presented by the game studio World Challenge Game. According to participants, the coin was considered fairly reliable, so many people decided to become so‑called “early birds.”

“Early birds” are the first investors whom the exchange allows to buy a portion of the coins before official trading begins. Usually these people are long‑time participants and are considered trustworthy, so the exchange grants them such privileges. Later, when trading starts, the early birds sell part of their assets, recouping investments and profiting from the difference. Then trading proceeds as usual,” explains a crypto exchange player.

But on 21 November what investors had not foreseen happened. WhiteBIT “scammed” the early birds out of large sums. It turned out that immediately after the first participants gained access to WorldToken, the exchange somehow “forgot” to close the option for participants to exchange coins before the official start of trading. Thus a collision occurred: when trading began, the market was already oversupplied, and the situation got out of control.

“Something very strange happened. Normally the exchange would never allow swaps before trading starts. And if such a situation — where swaps are open before a listing — occurs, that’s a gross error. In fact the early birds who bought WorldToken in advance are now holding assets worth pennies despite having bought them for dollars. After the start, the token rose very weakly and almost immediately fell,” says another market participant, who does not hide his disappointment with how WhiteBIT behaved.

The Ukrainian exchange itself entered a fierce spat both with customers and with the organizers on X (formerly Twitter). Its representatives insist they are not to blame for trades going differently than planned. Moreover, they do not acknowledge that one of the biggest disappointments in the crypto market recently was caused by the failure to close coin swaps before the listing started.

In fact, WhiteBIT “scammed” its clients out of large sums of money. And now they do not know what to do with coins that not only did not bring the expected profit but have pushed them into the red.

However, the scandal on 21 November is not the only one WhiteBIT has managed to get into recently. Mid‑month it became known that the National Bank of Georgia granted a license to the digital bank Hash. In the opposition United National Movement it was stated that the new digital bank “aims to legalize money from Russia and use it in next year’s elections.”

The point is that among the founders of Hash are some of Georgia’s wealthiest people, Sulkhan and Lasha Papashvili, as well as their Ukrainian partner Volodymyr Nosov. The latter is precisely the media face of the WhiteBIT exchange.

“Bloody and dirty Russian money will be used for pre‑election purposes and will replenish Bidzina Ivanishvili’s party coffers in the 2024 elections. We know that the previous leadership of the National Bank did not grant a banking license to Papashvili’s company, which fell under sanctions, but Natia Turnava gave the green light to the Russian launderers of bloody money in Georgia,” says Georgian opposition figure Lasha Parulava, adding: “After the appointment of Otar Partskhaladze, who was sanctioned by America as a Russian spy, Natia Turnava personally took over the operational management of Russian money, which raises justified suspicions that Georgian Dream will try to use electronic channels to obtain Russian money for the elections.”

One of Hash digital bank’s founders, Lasha Papashvili, has already defended Volodymyr Nosov, claiming that he is “the most honest of all people, who helps the Armed Forces of Ukraine and cooperates with the Ministry of Defense of Ukraine.” Allegedly Nosov has no connection to Russian money.

Volodymyr Nosov often says he helps the Ukrainian army. He even bought Kalush’s legendary Eurovision microphone for 900 thousand dollars to direct those funds to the Armed Forces of Ukraine. He also bought Andriy Danylko’s Rolls‑Royce Freddie Mercury for 11 million and stated that he “cannot stay aside, because now every Ukrainian is a level.”

But the Russian trail at WhiteBIT, which leads to laundering occupiers’ money, has not disappeared. In February 2023 the High Anti‑Corruption Court obliged the National Anti‑Corruption Bureau of Ukraine to investigate the possible illegal transfer of money out of the country by WhiteBIT and its ties to Russia. Whether this investigation will lead to bringing fraudsters to justice remains to be seen.

What is alarming is how lightly Ukrainian authorities can sometimes treat the choice of partners. Last year it was announced that WhiteBIT would integrate and cooperate with the state portal Diia, which stores documents and personal data of millions of Ukrainians. In March 2023 the Ministry of Digital Transformation, together with a number of companies including WhiteBIT, launched an educational program on crypto literacy for Ukrainians. One can also join it via Diia. But it is doubtful that integrating state structures with questionable crypto players is safe.

The ending of the film Dump Money mentioned at the start of this article was that the small investors ultimately defeated the Wall Street monsters. Rules on the stock exchange were revised, and exchange operators began to listen to ordinary Americans. They achieved this through unity and indisputable arguments at hearings in the U.S. Congress. Whether crypto market investors and ordinary Ukrainians, who may become hostages of WhiteBIT’s schemes, will be able to protect themselves will be shown by the investigations of Ukraine’s anti‑corruption authorities.

Author: Olena Dobrodii