A digital currency was launched by a Russian national on a sanctions list, with ties to a $100M Ponzi scheme

By Christine Duhaime | November 25th, 2019

Russian on OFAC list launches a coin

The Kharon Brief has an interesting article here about Aleksei Muratov (Алексей Муратов), also spelled Aleksey Muratov, a Russian foreign national who is on the US OFAC sanctions list here, who founded, launched and owns an initial coin offering called PRIZM.

Source: Twitter

Donetsk People’s Republic

Muratov is the Central Executive Committee chairman of the Donetsk People’s Republic, a self-declared sovereign state seeking independence from the Ukraine. The Ukrainian government says the organization is a terrorist organization. According to an investigation conducted in the Netherlands, Donetsk People’s Republic operatives fired the missile that downed the Malaysian Airlines flight MH-17, killing 283 passengers on board.

PRIZM whitepaper

The PRIZM coin has a white paper for investors. It explains that the purpose of its digital currency is to move money anywhere in the world. It promises returns of up to 9.9% for mining via “proof of steak” (presumably “proof of stake” and not the meat product). The coin is popular and does have a Blockchain explorer, which shows peers validating transactions – most have IPs from Russia, Kazakstan and Germany. Its Instagram account promises that by using PRIZM, a user can avoid financial crime laws altogether – it says no identity is collected from a person or required to be given, and it is completely anonymous. It goes so far as to say its transactions are also anonymous and a user can move money anywhere on the planet in seconds.

On Instagram, it promises anonymous money
transfers anywhere on the planet (Source: Instagram)

PRIZM’s promoter is the founder of the defunct WEX exchange, which has US$450 million allegedly missing

PRIZM is being promoted by Dmitriy Vasilyev, the Russian national who co-founded the World Exchange Services (WEX) digital currency exchange allegedly in Singapore, where the AML laws are lax. The WEX rose from the ashes of the BTC-e digital currency exchange, shut down by the FBI in conjunction with the Canadian darknet service AlphaBay. WEX launched an ICO, the WEX ICO, possibly to acquire users from the former BTC-e. More recently, Vasilyev was arrested in Italy in connection with WEX but allegedly subsequently released. The WEX ICO is no more.

Dmitriy Vasilyev, from BTC-e to WEX to PRIZM

The other co-founder of WEX, Alexei Bilyuchenko (who was an admin of BTC-e), alleges that WEX lost US$450 million because Russian agents from the Federal Security Service physically forced him to hand over the Trezors holding all of the pooled digital currencies of the exchange and of its customers, as well as all the passwords. Part of what he alleges doesn’t make sense because he also alleged that it took two weeks to transfer all those digital currencies from a Trezor to other wallets allegedly controlled by the Russian government.

PRIZM tied to anti-vaxxers

The PRIZM coin has a political agenda, beyond the fact that its founder is a leader of the separatist Donetsk People’s Republic. The PRIZM coin is promoted as an “activist” coin on its social media accounts, affiliated with an organization called Change The World (CTW). It is an anti-vaxx organization, calling for an end to all vaccinations globally. Proceeds from buying PRIZM coins go to anti-vaxxers. They also support the Donetsk People’s Republic.

PRIZM founder says ICOs can bypass sanctions

That PRIZM may have been created in part to move money to avoid sanctions seems clear from comments Muratov has made. For example, on Twitter below, he suggests that digital currencies can be used to bypass US sanctions. He also runs PRIZM mining farms, creating his own stash of PRIZM coins that he can convert to Bitcoin or cash out on any exchange.

In another possible sanctions avoidance statement, people from CTW with Muratov (in the grey hooded jacket), held a ceremony for PRIZM which involved the burning of US dollar bills; whether fake or real is unknown.

Burning US cash for PRIZM (Source: YouTube)

And a few months ago, an orthodox priest was called upon to bless PRIZM.

Bless this ICO (Source: YouTube)

Both groups (PRIZM coin and CTW) held a black tie ball for their so-called activists in Russia, and used pictures of Hollywood movie stars and a famous model in a video to suggest they attended the ball (and ergo support PRIZM). None of the movie stars or models in their video attended the event.

(Source: YouTube)

Ties to Ponzi scheme called MMM

News articles that interviewed Muratov allege he is a nuclear engineer and was the Head Engineer of the Kursk Nuclear Power Plant in Russia for ten years, a post he allegedly left to go into politics at 24-years-old, which would mean he was the head of the nuclear plant’s engineering at 14-years-old, which means he entered university at about 6-years-old.

In Russia, he was the deputy of the Kurchatov City Duma and later moved to India where he was associated with a Ponzi scheme called Mavrodi Mondial Moneybox (MMM). He was arrested in India in 2013 in connection with MMM. Allegedly, Russian consular officials in India assisted him to flee to Russia to avoid prosecution for MMM.

Sergey Mavrodi

MMM was a Russian Ponzi scheme that had three or more iterations. The first iteration was started in the 1990s by a Russian man named Sergey Mavrodi, as an investment fund that promised returns of 3,000% to investors. Investors lost over US$1 billion (equal back then to 1/5 of the Russian central bank’s reserves) but despite the losses, part of the Russian population continued to support Mavrodi. Mavrodi admitted MMM was a Ponzi scheme but said it was, in his view, a virtuous one. Here, after he was released from prison, he admitted that Russian investors were illiterate and did not know what they were giving money to him for, and that he put most of the money in beneficial ownership arrangements (in shares of other corporations held in the names of other persons for him) and has no intention of paying the US$1 billion back.

The Mavro ICO

A later iteration involved Bitcoin payments. It launched after the death of Mavrodi. It had its own digital currency called the Mavro (named after Mavrodi). One Bitcoin was equal to one Mavro. To acquire Mavro coins, a member had to first help another person by sending them Bitcoin, and once a person sent Bitcoin, he or she would get an equal amount of Mavro sent to a wallet, plus 30%. And if they promoted MMM on social media, they could earn more Mavro. Many of the Ponzi participants had accounts on BitcoinTalk where they lured people in and solicited payments in Bitcoin. The Mavro appears to have been capable of being used for nothing and in essence, it would appear that members were just sending Bitcoin away to strangers and getting nothing in return except access to a wallet that held a certain balance of useless Mavro coins. It was the model that was used by OneCoin years later.

At its peak, the iteration of this MMM scheme circulated more than US$150 million dollars a day. The scheme was a a zero-sum investment model, in which one person’s loss was another’s gain. The Ponzi scheme took money from victims in over 80 different countries, mostly from India and Indonesia. Transactional analysis showed that much of the funds stayed in Indonesia, suggesting the funds are parked there. Academics have found that a large portion of the proceeds of crime from this particular iteration of the MMM Ponzi scheme went through digital currency exchanges.

Muratov does not downplay a role in MMM or his admiration for Mavrodi. They are both promoted on the CTW blog here, which alleges that MMM and Mavrodi were responsible for the growth of digital currencies in the world and the blog promises to continue the work of Mavrodi with MMM.

MMM is starting a new iteration with a new website for the coin, with a promotional video explaining how the Mavro coin was founded by Mavrodi after his incarceration, and extolling the virtues of MMM. It’s basically a commercial about how Mavrodi was a hero for taking a US$1 billion from Russians under the MMM banner and how the Russian government allegedly stole all the money (implying that Mavrodi couldn’t pay anyone back). Recently, the MMM was renamed MMM BSC on the same YouTube channel.

The theory that the Russian government is allegedly forcibly taking assets when they go missing is a new recurring theme advanced by some Russian digital currency people (Mavro coin; WEX coin; WEX exchange), who seem to be interconnected.

Slick new MMM ICO video for 2019 (Source: YouTube)

Enter Canada

Most surprising of all, you can buy PRIZM in Canada indirectly through a Canadian bank. Despite the heightened financial crime risks, its creator being on a sanctions list, the connection to a separatist state engaged in alleged terrorist-related activities blowing up critical infrastructure for political purposes, the alleged ties to the downing of MH-17 that killed hundreds of people, the ties to the MMM Ponzi scheme, the ties to BTC-e, AlphaBay and WEX, Coinsquare, a digital currency exchange in Canada, teaches one how to buy and sell PRIZM with them and move the proceeds back out to your bank.

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