Criminal Case Against Failed WEX Crypto Exchange Points at Russian Law Enforcement

The formerly anonymous administrator of the cryptocurrency exchange WEX, which shut down last summer, has made some shocking claims about the fate of "Hundreds of millions" of dollars of clients' cryptocurrency in talks with Russian police.

Russian citizen Alexei Bilyuchenko, who confessed to being the tech administrator of the infamous BTC-e exchange and later co-founder of WEX, had been questioned as part of a criminal investigation underway in Russia since late 2018, BBC News Russian reported Friday.

In his statements, Bilyuchenko said he was forced to send all the cryptocurrency in WEX's wallets to unnamed staffers of the Federal Security Service, the successor of the Soviet KGB, shortly before the exchange ceased operations.

Back in Russia, Bilyuchenko used the database of BTC-e users to launch the WEX platform, together with OTC trader Dmitri Vasilev, the official owner of WEX at that time.

According to Bilyuchenko's police statements, in the summer of 2018, right before WEX collapsed, he was in talks with Malofeev, who wanted to obtain the database of the WEX users, presumed to be for a new crypto exchange named Vladex, the BBC says.

Malofeev has previously denied links to WEX to the BBC, and would not comment for the latest report saying it was "Based on fabricated materials," the broadcaster says.

Soon after Vinnik was arrested, WEX opened, promising to return users' funds.

The individuals running both BTC-e and WEX have always maintained anonymity, talking to the users under pseudonyms in the exchange's trollboxes and on the Bitcointalk forum.

WEX ceased operations and froze all withdrawals.

Millions of dollars worth of crypto left WEX's wallets for other exchanges between July and October 2018, CoinDesk reported at the time.