For those who are interested in the case of the Canadian BitRush Corp, we may bring an update. Of course, we do this in our own interest as the shareholders of FinTelegram Investors Protection Ltd (“FinTelegram”) were involved in the establishment of the public-listed Canadian BitRush Corp. BitRush Corp was one of the first public-listed crypto companies worldwide and can thus be called a crypto pioneer on the capital markets. The listing on the Canadian Securities Exchange (CSE) along with a co-listing on the Frankfurt Stock Exchange took place in September 2015 long before the hype about cryptocurrencies or ICO’s was in sight. It was hard work back then to convince the regulators and the admission commissions in Toronto and Frankfurt.
The founders were forced out of the company at the end of 2016 over a dispute regarding money laundering. The founders filed a lawsuit. Now, after more than 18 months, the founders’ lawsuits could be served. The stage is on for one of the first crypto-related litigation cases. Here is the story in a nutshell.
Establishment and IPO
BitRush Corp was founded in 2013 by the shareholders of FinTelegram. Together with developers and crypto evangelists from Canada, Ukraine, and Russia, the startup focused on the development of a blockchain-based advertising platform along with a cryptographic payment and clearing system. We are talking about a time when there was only Bitcoin (BTC) and it was traded below USD 200. The average Joe had no clue on cryptocurrencies back then. In 2015 BitRush became a public-listed company via a Reverse Takeover (RTO) with an already listed “real” mining shell.
One of the first investors was the Slovak entrepreneur Igor WOLLNER, who took a USD 500,000 stake in BitRush early 2016 when BRH was already public-listed. His sons Sven WOLLNER and Chris WOLLNER joined the management team. Together with the Austrian investor Hans-Joerg WAGNER, the WOLLNERs founded HSRC Investment Ltd in Singapore, through which they intended to manage the investment in BitRush Corp.
Binary options, Money laundering, and Shareholder Battle
In the dawn of the big crypto hype at the end of 2016, BitRush Corp had the opportunity to enter into a partnership with the German online-gaming veteran Uwe LENHOFF and his public-listed VELTYCO GROUP LTD (UK). This partnership would have allegedly brought BitRush Corp up to USD 3 billion in payment volume for its cryptographic payment platform. It looked like a very opportunity in the first place. Hence, a letter of intent to cooperate was signed between the parties in June 2016. Unfortunately, a due diligence conducted by BitRush concluded that this payment volume was primarily connected to illegal activities. VELTYCO made its money through binary options (e.g. Option888), online sports betting or lotteries (LottoPalace) through strange offshore constructions. Auditors and lawyers strongly advised the BitRush founders against doing such business.
Therefore, the BitRush founders refused to cooperate with VELTYCO and Uwe LENHOFF. It would have been too dangerous for the listed BitRush Corp and its management. This decision has now proven to be the right one. The binary options are banned by Canada, USA, Israel, and the EU. It is seen as a kind of illegal gambling where investors have been cheated by billions over the years. Many of the former operators of binary options platforms have now been condemned and imprisoned. The Veltyco Option888 platform, for example, has been warned by financial market regulators in the UK, Italy, Germany, and Austria to stop its illegal activities. Investors were expressly warned. VELTYCO is deeply involved in illegal activities and CEO Melissa BLAU has just recently resigned. Here is our reporting on VELTYCO.
The BitRush shareholders around Igor WOLLNER and HSRC Investment, on the other hand, saw things differently at the time. Unlike the founders, they were not afraid of money laundering and the illicit binary options and gambling schemes. Despite explicit warnings from auditors, they wanted to do business with VELTYCO and Uwe LENHOFF. Consequently, a dispute with the founders arose and they were pushed out of the company with the help of the best Canadian security lawyers. In a court case in Toronto, the squeeze-out of the founders in their absence was obtained by presenting false affidavits to the court. The founders rejected the Toronto court as a forum non conveniens and have therefore not defended themselves. Hence, they were not a party to the court case and thus it was a simple exercise for the plaintiffs to expropriate them.
The complaint of the founders
The founders filed a lawsuit against Igor WOLLNER and HSRC Investment before the appropriate court in Europe. Furthermore, criminal complaints have filed with European authorities for money laundering.
Unfortunately, the Defendants could not be served with the lawsuit for more than 18 months. The WOLLNER family, close to the political establishment and hence quite influential in Slovakia, was able to prevent the local authorities from effectively delivering the lawsuit for months. HSRC Investment deleted their website, Hans-Joerg WAGNER deleted his LinkedIn profile and the WOLLNER family vanished somewhere in Slovakia. They switched into complete stealth mode to avoid any court action against them. They paid hundreds of thousands of Dollar to their lawyers to fight against the founders.
But now the time has come. The Defendants have finally been served properly with the lawsuit. The first court hearing before the appropriate court has been scheduled at the beginning of January 2019. This court case is nothing less than the processing of a dirty chapter of the crypto scene – money laundering and illegal payment flows.
We will continue to report on the case of BitRush Corp and thus also on a piece of crypto history.