Investigative reports by Shana Dovi on Medium have revealed serious allegations against CoinsPaid, an Austrian crypto payment processor operated under Dream Finance OÜ via Estonia. The report outlines a complex web of financial misconduct, fraud, and regulatory evasion allegedly orchestrated by the company’s management and shadow stakeholders. Notably, the Austrian beneficial owner is allegedly a frontman for Belarusian interests.
Overview of CoinsPaid
CoinsPaid operates through legal entities in Estonia, Lithuania, and El Salvador. Its main operating entity, Dream Finance OÜ, holds a crypto license in Estonia and is controlled by Austrian entrepreneur Alexander Horst Riedinger, with Maksim Krupyshev serving as CEO. Another associated brand, CryptoProcessing, is also operated by the Estonian entity.
Key Allegations Against CoinsPaid
- Financial Misconduct and Bankruptcy: CoinsPaid publicly acknowledged a $37 million loss due to a hack, which conflicts with earlier smaller figures. There are suggestions of bankruptcy despite continued operations, as internal financial assessments reveal significant negative equity.
- Involvement in Money Laundering: The company is accused of laundering hundreds of millions of euros annually. Its operations allegedly involve a network of Belarusian expatriates, focusing on offshore and illegal gambling platforms, while also highlighting non-compliance with local labor and tax regulations.
- Dubious Management Practices: Maksim Krupyshev, a Ukrainian crypto influencer and CEO of CoinsPaid, is accused of fronting for Belarusian operators. There are allegations of manipulation of corporate structures to facilitate financial crimes without direct corporate implications.
- Regulatory Evasion and Compliance Issues: CoinsPaid is said to exploit regulatory loopholes in Estonia and other jurisdictions, establishing front companies to obscure operations and avoid scrutiny.
- Impact and Scope of Operations: Whistleblower reports suggest broader risks to the financial system akin to previous crypto sector crises. Allegations of weak regulatory oversight in Estonia include the renewal of Dream Finance’s license despite ongoing issues.
The Hidden AlphaPo Connection
Shana Dovi’s investigation reveals significant connections between CoinsPaid and another crypto payment processor, AlphaPo. These links suggest operational and managerial overlaps, raising concerns about transparency and compliance.
Key points of connection include shared technology and management, a common compliance department that raises potential conflicts of interest, simultaneous security breaches in July 2023, financial interdependence with funds moving between the two entities without proper compensation, and shared personnel discussions via Slack channels. CoinsPaid presents itself as separate from AlphaPo in official narratives while internally acknowledging their unity.
These connections suggest a deliberate effort to obfuscate true ownership and control, potentially facilitating unethical or illegal activities.
Key Individuals Involved
The report highlights several individuals associated with CoinsPaid and AlphaPo, suggesting their involvement in the companies’ questionable operations:
- Alexander Horst Riedinger: Beneficial owner of CoinsPaid Group.
- Maksim Krupyshev: CEO of CoinsPaid, alleged front for Belarusian interests.
- Ivan Montik: Co-founder of CoinsPaid, founder of SoftSwiss.
- Pavel Kashuba: Former CFO and co-CEO of CoinsPaid.
- Frédéric Hubin: Former board member in Estonia for CoinsPaid.
- Svetlana Prussova: Board member of Dream Finance OÜ, compliance head.
- Violaine Champetier de Ribes: Public relations head for Baltics.
- Hanna Drabysheuskaya: Payments handler at CoinsPaid.
- Aliaksei Kuzniatsou: Head of Treasury at CoinsPaid and AlphaPo.
- Maria Akulenko: Former Chief Legal Officer of CoinsPaid Group.
Business Metrics and Entities
CoinsPaid operates under various trading names, including CoinsPaid, CryptoProcessing, and AlphaPo. Its business activities encompass crypto exchange, OTC desk, and high-risk payment processing. The company maintains several domains, including cryptoprocessing.com, coinspaid.com, and alphapo.net, and is active on social media platforms like LinkedIn, Facebook, Instagram, and Twitter.
The legal entities associated with CoinsPaid include Dream Finance OÜ (Estonia), Dream Finance UAB (Lithuania), Dream Finance S.A. (El Salvador), A.R. Merkeleon GmbH (Austria), and Skylock Investments Ltd (Cyprus). The jurisdictions in which it operates include Estonia, Austria, Cyprus, El Salvador, and St. Vincent & The Grenadines, with an authorization from the FIU crypto license no FVT000166.
Implications and Future Outlook
The allegations against CoinsPaid and its connections to AlphaPo raise significant concerns about the integrity of the crypto payment processing industry. The potential for financial misconduct, regulatory evasion, and money laundering not only jeopardizes the companies involved but also poses broader risks to the financial system.
Regulatory Response and Industry Impact
The ongoing investigations and reports may prompt regulatory bodies in various jurisdictions to take a closer look at CoinsPaid and AlphaPo. This scrutiny could lead to stricter regulations for crypto payment processors, particularly in areas such as compliance, transparency, and consumer protection.
- Increased Regulatory Scrutiny: Authorities may implement more rigorous checks on crypto companies, especially those operating in jurisdictions known for lax regulations. This could result in heightened compliance requirements and more frequent audits.
- Potential Legal Consequences: If the allegations are substantiated, key individuals involved may face legal repercussions, including fines, sanctions, or even criminal charges. This could lead to a significant reshaping of the management structures within CoinsPaid and AlphaPo.
- Market Repercussions: The revelations could impact investor confidence in CoinsPaid and similar companies, potentially leading to a decline in business and market share. Customers may seek alternatives that offer greater transparency and compliance with regulations.
- Industry Reputation: The crypto industry as a whole may suffer from reputational damage due to the actions of a few companies. This could hinder the growth and acceptance of cryptocurrencies and blockchain technology in mainstream finance.
Conclusion
The situation surrounding CoinsPaid and its alleged connections to financial misconduct and regulatory evasion is a developing story that warrants close attention. As investigations continue, the outcomes could have far-reaching implications for the crypto payment processing industry and the regulatory landscape. Stakeholders, including investors, customers, and regulatory bodies, must remain vigilant as the situation unfolds, ensuring that ethical practices and compliance are prioritized in the rapidly evolving world of cryptocurrency.
The ongoing scrutiny of CoinsPaid and its operations serves as a reminder of the importance of transparency and accountability in the financial sector, particularly in the burgeoning field of cryptocurrency.
