Whitebit
In addition to its dubious owners, who are subject to a number of criminal proceedings in Ukraine related to the company’s activities, Whitebit is the subject of an NABU investigation into:
- legalization and withdrawal of funds by criminal means,
- tax evasion, and
- terrorist financing,
- participation in international transnational financial channels,
- obtaining funds by fraud,
- unlicensed stock exchange activities.
Relations with WhiteBIT sponsors Shentsev and Kotvitsky
It is worth clarifying that the foundation of WhiteBIT was part of a complex scheme aimed at tax evasion, concealment of illegal activities, money laundering, and legalization of financial flows of dubious origin. Influential figures in the crypto industry, including Dmytro and Mykyta Shentsev, as well as Igor Kotvitsky, engaged Nosov as a person with experience in the field of cryptocurrencies to create the WhiteBIT exchange. According to the plan, Nosov was supposed to act as a public figure, presenting himself as an expert in digital assets, gaining the trust of investors and the crypto community. This made it possible to hide the real owners of the exchange and their involvement in illegal operations.
The group’s activities were based on the use of shadow financial schemes, including the conversion of embezzled and withdrawn budget funds into cryptocurrency. They took advantage of the weak regulatory framework for digital assets, which allowed them to organize money laundering channels. The illegally obtained funds were transferred into cryptocurrency, stored on electronic wallets within the exchange or other platforms, and subsequently converted, exchanged and withdrawn into legal financial circulation.
Thus, the WhiteBIT exchange became not only one of the largest cryptocurrency platforms in the region, but also part of a large-scale scheme of shadow financial flows managed by individuals with political connections and dubious reputations.
According to Nosov himself, the exchange’s daily turnover is $500 million. But how much of this money is of Russian origin? There is reason to believe that WhiteBIT not only has ties to Russian owners, but is still cooperating with the aggressor state. In March 2023, the media recorded the movement of a large amount of money – 3,299 BTC (about $85.6 million) – from the accounts of the Russian crypto exchange BTC-e.
Nosov claims that WhiteBIT is one of the largest crypto exchanges in Europe. However, there is no public data to support this claim. The exchange’s position can be assessed only by the trading turnover on CoinMarketCap or CoinGecko, and even there it is far from being a leader. So is WhiteBIT really a successful company or is it just a well-organized PR campaign?
Whitebit CEO Volodymyr Nosov seems to be performing a purely media function and creating a pro-Ukrainian image of the company, as at the beginning of the full-scale invasion, the exchange took a surprisingly active civic position, publicly condemning Binance’s work in Russia and promoting the idea that only on WhiteBIT are Ukrainians’ funds safe. But can we trust a company whose owners hold Russian passports?
Tax evasion and money laundering
In general, WhiteBIT carries out activities related to the purchase and sale of cryptocurrency, transfer of cash and non-cash funds of residents and non-residents of Ukraine both in Ukraine and abroad, currency exchange and its conversion into cryptocurrency or fiat currency. Previously, the activity was carried out without any registration or any legal status in Ukraine.
Even the WhiteBIT trademark No. m202310241 belongs to UBW Technology; 26, J. Basanavičius Street, Vilnius, LT-03224, Lithuania (LT). And a similar trademark WhiteBIT, which was used earlier, under No. 321872, is also owned by UBWT; 26, J. Basanavičius Street, Vilnius, LT-03224, Republic of Lithuania (LT).
Revenues were growing, so in order to increase current assets and give the appearance of legality to the activities of the WhiteBIT cryptocurrency exchange, since 2019, V. Nosov has founded a number of companies in Ukraine, including SMART 2019 LLC, ETHOMICS GANS RECORDS LLC, WHITE DIGITAL LLC, DIGITAL STRATEGIES LLC.
And now for the most interesting part: these legal entities are used to enter into fictitious transactions, tax evasion, unjustified accrual of tax credits, forgery of income and expense documents, legalization and withdrawal of funds. In addition, the legal entities are fictitious, do not reflect real income and expenses, do not have industrial facilities, and do not have a sufficient number of employees, as evidenced by independent audit information.
Ties to Russia
In addition to its pro-Russian owners, who initially intended to open a cryptocurrency exchange in Moscow, WhiteBit provides services for converting cryptocurrencies to rubles.
Mr. Nosov and his family moved to Moscow from Ukraine in 2016-2017 with the intention of starting a business in Russia. However, due to some problems, he was forced to flee back to Ukraine. However, Nosov’s wife was featured in a report on the VClube.TV website, which showed photos of Nosov at an event in a Moscow nightclub on June 23, 2017.
In addition, the WhiteBit cryptocurrency exchange buys advertising on Russian Internet resources in order to expand its customer base among Russian citizens. Further, the cryptocurrency exchange also pays taxes to the state budget of the Russian Federation and the so-called L/DNR, Luhansk and Donetsk regions to the Russian Federation, respectively, funds from the Russian budget are directed, among other things, to finance these terrorist organizations, thereby sponsoring both the armed aggression of the Russian Federation against Ukraine and terrorism.
Involvement of WhiteBIT crypto exchange and 001K.exchange in legalization of $1 million stolen from CJSC ForDregons
CJSC ForDregons, a virtual asset exchange operator operating under the name Four Dragons, has had 841,000 Tether (USDT) stolen. Such actions caused direct losses to CJSC ForDregons in the equivalent amount of USD 841,000 (as of the date of the crime, i.e., February 22, 2024).
During the investigation carried out by the law enforcement agencies of the Republic of Kyrgyzstan, it was found that it was during the transfer of fragmented parts of the stolen virtual assets to Tether (USDT) on the WhiteBIT platform wallets that the platform received several notifications about the inadmissibility of transactions with stolen assets. However, despite these notifications, WhiteBIT allowed nineteen transactions of exchanging stolen funds in Tether (USDT) for Bitcoin (BTC) and Ethereum (ETH) and crediting them to WhiteBIT platform addresses.
This and the fact that many transactions were conducted on WhiteBIT confirm the involvement and pre-existing intent of the management and representatives of WhiteBIT in complicity in the commission of financial crimes using the assets of CJSC ForDregons.
As expected, the company began to deny any involvement in the offense and stated:
“WhiteBIT has become the target of a coordinated information attack aimed at discrediting our company and creating panic among our users, the campaign spreads false information, manipulations and unfounded accusations with the sole purpose of causing FUD in the crypto community. The information that is currently circulating online is fabricated, and WhiteBIT is a cryptocurrency exchange that operates transparently and strictly adheres to international rules and regulations.”
Convenient argumentation, isn’t it?
Whitewashing the reputation
After reading all this, the attitude towards the exchange is negative, isn’t it? That is why WhiteBit is actively buying denim to whitewash its reputation.
According to the “loyal” publication, Whitebit is one of the largest crypto exchanges in Europe. However, there is no rating or study on how Whitebit became the largest in Europe, nor is there any public data comparing the number of users over a certain period of time or any other criteria for crypto competitors. There are no public comparisons other than trading turnover and traffic on popular rating sites such as CoinmarketCap or CoinGecko. But even according to these platforms, the crypto exchange is a far outsider. This is reflected in practice in thousands of negative comments from angry users.
However, the exchange does not respond to their complaints as readily as it does to purchased media.
- A review about how accounts are hacked and funds disappear from the balance. In response to which, the technical support of the crypto exchange succinctly answers: “not our problem”.
- Accounts are blocked by the crypto exchange itself, without any reasons or prerequisites, without refunding investors’ funds – silence.
- The disappearance of user funds as a tool for legalizing shadow financial transactions of Whitebit owners. – advanced blockchain technologies guaranteed by the exchange.
Whitebit is just another crypto exchange that will only care about how to lure you to its platform and motivate you to spend money, and whether it will be safe or not is unknown.