NEW YORK--(BUSINESS WIRE)--A renowned Kazakh entrepreneur says he is fighting against time for the return of crypto assets worth millions of dollars, after they were allegedly misappropriated by his former business partners.
Arman Oyekenov claims that imminent changes in the way certain funds in the Ethereum network are housed will give Julian Svirsky, an American-Russian banker who formerly worked at Renaissance Capital, the opportunity to flee with millions of dollars in stolen money, despite an international court order freezing the disputed funds.
The case is being closely watched by legal experts and raises important questions about the ability of regulators, the courts and the criminal authorities to combat fraud and money-laundering on crypto networks. The Federal Bureau of Investigation (FBI) and other agencies are being alerted about the case.
Oyekenov, a one-third owner of Tensigma, established the crypto real estate business with Svirsky and Denis Donin before suing the pair for alleged fraud. In May 2021, the British Virgin Islands High Court (Commercial Division) granted a worldwide freezing order prohibiting Svirsky and Donin from dealing with the assets of Tensigma Limited up to the value of $23 million. The freezing order was continued in December 2021 and remains in force today.
In apparent breach of the freezing injunction, more than $6.2 million of cryptocurrency has since been stolen and funnelled through cryptocurrency “mixers”, rendering efforts to trace the Bitcoin and Ethereum almost impossible.
Tensigma’s only remaining cryptocurrency asset, worth about $10 million, is Ethereum staked on the Beacon Deposit Contract. The so-called Shanghai Upgrade to the Ethereum platform, scheduled for April 12, allows holders to “unstake” their assets for the first time. Parties will be watching closely what happens to the staked Ethereum at that point.
CANDEY LLC in New York has been instructed to refer Julian Svirsky and Denis Donin to the US criminal authorities for extradition to the United States on charges of wire fraud and theft.
Background – ICO to shareholder dispute
The funds at the centre of this dispute were raised through an initial coin offering in late 2017 in connection with the Atlant.io platform and two ventures known as uvas.com and karta.com.
Oyekenov is a one-third owner of Tensigma and claims that the theft and appropriation of cryptocurrency by Svirsky and Donin has resulted in the destruction of his shareholder value. Tensigma is now in liquidation.
In their Defence, Svirsky and Donin say that Oyekenov obtained his shareholding in Tensigma through coercion and was only an employee. It is also alleged the cryptocurrency no longer belongs to Tensigma having been transferred to a Gibraltar company named Digital Asset Exchange Limited for $559,279 in July 2020. Oyekenov refutes the claim that he was merely an employee and alleges that DAE transaction was a sham transaction, as the true value of the cryptocurrency was millions of dollars.
Freezing Injunction – “Mr. Svirsky and Mr Donin are ready to lie”
In reaching his decision to grant the worldwide freezing injunction, Mr Justice Gerhard Wallbank commented that:
“If it is right, as it appears to be, that Mr. Svirsky and Mr Donin are ready to lie about the position of the Claimant within their business, and basically to try and mislead the Court into pretending that the Claimant was a mere employee as opposed to a partner. If that’s right, and on the documents it appears to be right. […]
They also have, reading those text messages, what I think can best be called a macho vulgarity in the obscenity of their language that they use between them such that they seem to be rather crude individuals. I don’t think for one moment that they’d lose sleep over putting assets a few steps further, may using nominees to pretend that they don’t have them.”
Svirsky and Donin have appealed various orders in the proceedings including the grant of the freezing injunction itself. The appeals are due to be heard by the Eastern Caribbean Court of Appeal in May 2023.