Scam Alert! Is Velvet the New WEX?
January 15, 2019 by Jeff Fawkes
The WEX exchange that disappeared together with at least $200 million USD worth of users’ funds seems to have had a second wind in the form of the VELVET.exchange platform. Is Velvet the next WEX?
Also read: Next Up: Bitwise Bitcoin ETF Would Track BTC, ‘Meaningful Hard Forks’
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Velvet Exchange Ready To Launch With a Negative Reputation
The new crypto trading spot is now working in beta mode and has been since December 10th, 2018. You can deposit funds if you want, but this is not a good idea.
Russian Bitcointalk users started accusing the project of being developed by the old WEX/BTC-e team under the direction of the infamous Dmitrii Vasilev. A number of posts and conversations on Bitcointalk strongly suggest: the exchange is indeed a new fraud attempt. It all started with a tiny Bitcoitalk announcement from a velvet.exchange official account:
On January 7th, 2019, user Trade Runner posted an update in another thread called Status of WEX (World Exchange Services). The thread presumes that the WEX exchange was “rebranded” to VELVET based on their registration names:
User Agreement Disappeared After Lazy Failure
Later, users actually read the Velvet User Agreement and found that it is the same as WEX’s, without any edits. Here, Paga claims he has screenshots of the Velvet exchange’s User Agreement with WEX credentials clearly there:
Some other forum users claim they saw the old agreement too. After the disclosure, Velvet admins have deleted the text from corresponding pages, replacing it with a “We’ll post soon” remark. After four days, a new User Agreement and Privacy Policy statement is yet to be seen:
Similar Names, Different Directors
On January 9th, 2019, a user with the nickname Polizei created a thread with Velvet-related warnings in English and Russian. He wrote that World Exchange Services Pte. Ltd and World Trade Service Pte. Ltd. look alike and they also both have registration numbers in the same jurisdiction.
He warned people against using Velvet and suggested reporting them to GoDaddy to block the VELVET domain:
Then, user gvozdkoff found the public records of Vladislav Smirnov and some “Exchange One” company that has recently obtained two financial licenses in the country of Estonia to operate as the Velvet exchange. Many users have presumed that Smirnov is just a puppet of Vasilev. Also note that this firm has made a tiny capital payment of 2,500 Euros:
In another VELVET related thread, the exchange representative disclosed that the company had public registration data in both Singapore and Estonia, and the team works from Moscow. According to him, the name of the current CEO is indeed Vladislav Smirnov, a businessman from Estonia with nothing to do with WEX or BTC-e:
Former WEX Workers’ Data Dumped to Bitcoin Forums
While Vasilev is creating his new exchange, the Bitcointalk threads are full of posts by user Velvet.Exchanged. These feature names, telegram handles, links, and photos of key WEX individuals.
There are mentions about three of them in the thread, but you can find a lot more data if you want. Some of the photos taken in the old WEX/BTC-e office in Moscow were published only in January 2019, which means that the person who shared them is a fearful insider.
Users Sara Parker and sensay82 discuss the possibility of WEX insider data dumps and speak like they used to work with Vasilev, Vinnik, and the infamous hacker Alexey Belan (Белан) right in prison: their posts are full of obsessive language and slang:
They discuss how the exchange admin took all customers’ money without sharing it with anyone from the team. Also, Sara trolls sensay82 due to his intention to dump logs to the government and being burned as insignificant compared to Alexey “Faberge” Belan.
A 2.6 Million Dollar Writ of Summons
The BTC-e related documents show that there was a writ of summons issued by the High Court of the Republic of Singapore in 2018, exactly when WEX suspended withdrawals due to “technical issues” on July 12th.
Mrs. Pimporn Carty from Thailand successfully filed a lawsuit against the BTC-e exchange regarding the loss of $2.6 million. It looks like Dmitrii Vasilev received this document on July 12th and decided to flee with the money before foreign law enforcement started to pursue him.
Leave Hope at Home, Live Outside The System
Some may suggest crypto regulation is the ultimate solution against scammers. But it seems like the main enemy of fund safety is not regulatory uncertainty or scammers. It’s the hopes of traders. I have spotted some English posts on Reddit hoping for the WEX exchange to work again.
Hope is the last thing we would drop if things are bad, huh?
But unfortunately, Russian scammers don’t like to feel anything except joy and they have no mercy. In such dark times for bitcoin and blockchain, allow me to cite A. Antonopoulos:
“Not your private keys – not your bitcoin.”
Also, consider that the Velvet domain is registered anonymously, and the exchange site still has no reference to a team behind the project.
Will WEX traders receive their money back? Do you have any coins lost on WEX? Share your thoughts in the comments section below.
Images by Jeff Fawkes, Reddit, Bitcointalk, Velvet
