After five years, in 2015, during the ongoing Russian aggression against Ukraine, Khachuyan founded two companies, Social Data Hub and Fubutech Technologies, whose subject was open data accumulation and analysis. Among Fubutech Technologies’ clients were Russian media, Kazakhstan authorities, multiple worldwide businesses, and the FSB, for which the start-up did face recognition and provided them with web surveillance algorithms.

In 2019, Artur Khachuyan concentrated all his activities within a newly founded company, Tazeros Global Systems, and in 2022, he started to research warfare in Ukraine.

Does his company collaborate with the Kremlin by providing the Russian government with data about Ukrainians, in particular the militants, how dangerous its product is, and what Khachuyan is doing at the moment? Read in a joint investigation of AIN.UA and the Molfar OSINT community.

Who is Artur Khachuyan, and what should you know about him?

Artur Khachuyan started his career in 2012 at the Artbrother Media Group design studio. However, on his VK page, Khachuyan stated that he worked as the Chief of the Cybersecurity Department at the ARDA consulting company, a project within the Russian Propagandist Tina Kandelaki and her husband Vasili Brovko holding called Apostol Media, from 2012 to 2015.

In 2015, Khachuyan founded Fubutech Technologies and Social Data Hub (SDH), whose domain was data accumulation and analysis. On LinkedIn, Khachuyan wrote that he is a co-founder, and his business partner is a Belarusian, Maksim Balashevich.

Khachuyan stated they gathered data without user permission, and their company had copies of VK and ОК (Odnoklassniki) without media libraries, and of the Russian segments of Facebook, Instagram, Twitter (X), Tumbler, AirBnB, YouDo, Tinder, Badoo, Avito, and other media. The two companies provided all the data and services to Russian politicians, authorities, state entities, and Russian propaganda media TASS, RIA Novosti, and Life.ru.

Fubutech Technologies and Social Data Hub shared a team of developers and analysts. They both did face, ID, car signs, and street name recognition, but SDH stood for business cooperation, and Fubutech stood for state-owned customers.

How are Khachuyan and his companies related to the Kremlin: partners, activities, and family

Khachuyan’s company launched the Parental Care project dedicated to extreme children’s behavior analysis in 2017. In the same year, they started to receive orders from “developing countries” and cooperated with Kazakhstan authorities the following year.

Back in 2017, worth mentioning is Khachuyan’s speech at Innoprom 2017, which the Russian dictator Putin opened. Rostech was also represented at the event by the Special Order Director Vasili Brovko, the Kandelaki’s husband mentioned above. Currently, he is on the sanction lists of Ukraine, the USA, Great Britain, and Canada.

In 2017, Khachuyan also declared cooperation with Russian authorities and that some of their employees might not leave Russia due to confidentiality matters. In addition, some of their team members could also have military ranks. For himself, Khachuyan said that he had no access to state secrets data his companies were processing.

He also saidthat the government was their primary software customer, and the private entities could purchase only the opinion-leader-analysis product part. In 2018, the company created the BigDataLove dating app, matching people based on user behavior data. However, it was closed due to the lack of partners who could do some part of the whole work.

For example, Facebook sent the supposed Irish legal entity, Social Data Hub (not found in the Irish Companies Registration Office register), a letter claiming Meta users’ data collection and selling without Meta’s consent. Facebook also suspected Khachuyan and his companies of making deals with the government and checking users’ personal profile pictures to identify them.

The Russian medium Inc. informed that Social Data Hub is a company that “serves Russian security authorities”; Khachuyan confirmed it by naming his company “a state algorithm developer.”

After that, Facebook suspended 66 SDH’s and Fubutech’s business and employee profiles but restored them after six weeks, even without going to court.

According to Intelligence Online, the companies collaborated with the FSB by providing web surveillance and face recognition services. They also let FSB investigators analyze judicial request metadata and some intercepted data — the developers searched suspects and provided authorities with deanonymization algorithms.

State orders

In 2018, the Founder and CEO at Prepaire Labs, Carl Freer, stated that Fubutech cooperated with the FSB during the 2018 Football World Cup in Russia. According to Brovko, the face recognition system should not have worked those days because they failed to get approval from FIFA. Khachuyan, however, said that the stadium management purchased remote identification systems before the Mundial.

He explained how the system works: there is some “wrecked” fan who wrote “Let’s kill some Russians” on social media. Later, he wanted to purchase tickets online, but no one would be available for him. If this fan comes to a stadium, the system will recognize him and not let him inside.

A year later, Artur Khachuyan acknowledged his companies’ participation in face recognition in cooperation with the Russian Patrol Police.

Business orders

In 2018, Artur Khachuyan stated that he didn’t want to have the reputation of an “agent of a blood-thirsty regime” and declare the financial data of his companies.

Ties with the Kremlin through business partners

In 2017, Fubutech developed a TV rating of politicians for MediaMetrics, founded by German Klimenko. Between 2016 and 2018, Klimenko worked as the Russian Federation’s President Advisor for Internet Development, and in 2019, he became the Chairman of the Board at the Russian Digital Economy Development Fund.

In 2018, the Khachuyan’s company analyzed politicians’ porn preferences at a request of LifeNews, a part of News Media, whose CEO was Aram Gabrelyanov until 2018 (he got an Order of Honor from Putin for “objectivity in the coverage of events” in temporarily occupied Crimea, in 2014. However, there is no such presidential decree published).

In 2017, Gabrelyanov said the Kremlin “could be, undoubtedly, named as the real shareholder of Life all these years.” Gabrelyanov is also a sponsor of the WarGonzo propagandist Semen Pegov. In 2022, he became the leader of a “journalist workshop” on temporarily occupied territories of Ukraine.

In 2018, a businesswoman, Venera Rovenskaya, promoted Social Data Hub. Then, she was a member of the Russian Public Relations Association (RASO). Today, she works as the Expert Council of the State Duma Committee on Tourism and Development of Tourist Infrastructure.

In 2020, Khachuyan, in cooperation with the National Research University Higher School of Economics, worked on a big data draft law.

What Khachuyan’s role and proposals were remains unknown. However, the definition of big data got into the Law “On Information, Information Technology, and Information Protection” in 2020 — information and statistical reports, information on the location, characteristics of activities, and behavioral aspects of objects.

According to the bill, Roskomnadzor is responsible for registering big data operators and controlling their data processing.

Tazeros Global Systems

You can read on the Tazeros Global System website that all the SDC activities moved to Tazeros in 2019. At the same time, the company declares its operation started in 2010, and its subject is the accumulation and analysis of data from open sources, its own developed algorithms, and business partners.

The subject of Tazeros LLC, registered in February 2019, is data processing activities, provision of information placement services, and related activities.

Its founders were Artur Khachuyan (50%), Vazgen Askaryan (25%), Vadim Derevtsov (12.5%), and Evgeni Mokronosov (12.5%). But at the end of the year, Artur Khachuyan stood as a sole owner. The company pretends to work internationally with the reference to an address in the USA and its 24-language interface, including Ukrainian.

Tazeros in Ukraine: what did it study about the Russo-Ukrainian war, and what is Khachuyan’s position?

In March 2022, Tazeros published a study on social media posts regarding warfare in Ukraine. A Russian political activist, Aleksei Miniailo, said that Tazeros researched how Russians supported the Russian aggression against Ukraine for his project named “Do Russians want a war?”.

In February 2023, Khachuyan and Vot Tak analyzed administrative cases after the article Discrimination of the Russian Armed Forces, using the Pravosudiye state-owned system and the Moscow City and Region Court websites.

Khachuyan said that he doesn’t support what the Russian Federation is doing in Ukraine but also sees no sense in protesting against it. However, he visited the Crimean Bridge in 2020.

His mother, Tatyana Khachuyan, shared a propaganda video about Russian soldiers supposedly distributing bread on temporarily occupied territories of Ukraine while Ukrainian militants should have “pillaged and shot people.” She also posted pictures of the A. V. Alexandrov Academic Song and Dance Ensemble of the Russian Army art director.

In 2024, Khachuyan joined the group of people with the position “Not everything is so clear.” During one of the streams, he said, “Maybe you think I am a kind of fucking liberals and dream of everybody donating to the Armed Forces of Ukraine. It is a very complicated political matter.”

In March 2022, the founder said he possesses three apartments in Spain and has transferred all his activities from Russia three years ago. However, in November 2023, he also said he would stay in Russia as long as his grandmother, likely Sima Khachuyan, is sick.

He also said that his company had Belarusian and Ukrainian developers.

In April 2022, Artur Khachuyan went to Poland and registered individual entrepreneurship in computer programming after a year there. As of April 2024, Artur Khachuyan resides in Moscow and plans to visit the USA despite naming American politics “fascist one” during one of his streams.

What is the company doing now? Does it exist at all?

In October 2023, the company, in cooperation with Kseniya Sobchak’s Ostorozhno Media, did research on Russian escort agencies in Dubai. However, the legal entity, Tazeros LLC, was liquidated three months before, in June 2023.

According to the website, their alleged legal entity is Media Zoom LCC, which it missing though in American registers. If we look at the postal address — Dover, DE 19901, 8 The Green STE A — there are registered 513 companies, but no one has the same founders or name.

According to the Russian legal entity registers, OOO “SDH” (likely Social Data Hub) and OOO “Tazeros” were marked in the Uniform State Register of Legal Entities as excluded due to fake data. Khachuyan stated that his company just didn’t prolong the rent agreement and didn’t need SDH anymore.

It is known that in 2022, the Russian Fiscal Service searched OOO “Tazeros” and that in 2021 and 2022, the company paid a tax overdue fine of $54,000, and Mr. Khachuyan had a loan overdue of RUR 170,000 ($1,908) in 2020. In 2020, the tax debt of $3,400 was charged from the other Khachuyan company, OOO “SDH.”

During a live stream in April 2024, Artur said, “Unfortunately, there is almost no such collaboration with the organizations [special task forces] in Russia as it used to be.” He added that now he works on small projects via “innocent” partners. At the same time, he didn’t deny the fact of cooperation with other countries’ security.

The Molfar OSINT Community and the AIN.UA Editorial Board contacted Artur Khachuyan with a legend to find out the current status of his company but have received no response as of the day of publishing this article.

In 2024, Khachuyan said that about 100 people work for Tazeros now but “almost nobody from Russia.” We could find only a few people who mentioned their job experiences at SDH or Tazeros Global System.

We tried to reach all the above people but managed to talk only with one specialist on anonymous terms. He said Artur Khachuyan was the only person who worked at Tazeros and talked about numerous projects and developers, but in reality, none existed.

In a personal conversation, Khachuyan explained to the developer that people don’t want anybody to know where they work because of safety reasons, so many specialists didn’t know each other’s names. The company founder also could not provide access to a database with 10 PB of social media data.

According to our anonymous source, the company’s bank accounts have been blocked. When he went to court after he got no salary, Artur Khachuyan liquidated the legal entity using the bankruptcy procedure.

About GoStudent

• GoStudent is an edtech unicorn and global leading tutoring provider that was founded in 2016 by Felix Ohswald and Gregor Müller. The company is valued at €3 billion. Since launching, GoStudent has raised more than €590 million from investors, including €13.3 million Series A round in 2020.
• At its peak, GoStudent employed just over 2,000 people and served 24 countries. In August 2023, the startup received an additional $95 million round, a mix of equity and debt capital, with plans to expand its solutions to the DACH region.

GoStudent laid off 25% of its staff over the past six months

• In 2021, GoStudent opened an office in Sweden. The next year, the office shut down. GoStudent explained the decision: “tutoring in Sweden is less common than in certain other European countries”.
• GoStudent also struggled in the US due in part to the same sluggish economy, one former employee said, as well as heavy competition in the tutoring space. Overall, the wave of layoffs affected at least 200 people, which is about 25% of GoStudent’s staff worldwide

Former employees shared negative experience of working in the company

• 28 current and former GoStudent staff and faculty said they experienced a poorly run organization with clumsy leadership, Insider writes. They also claimed that GoStudent promoted a party culture and had lax standards for vetting tutors.
• Another GoStudent’s ex-staffer added that founders initially wanted to emulate WeWork’s culture. Employees in the Vienna, London, and France offices said Fridays were seen as party days at the company.
• Two other former employees claimed that tech issues with billing and software systems that weren’t resolved during their tenure. Another former employee felt that the company did not appreciate the legal nuances of expanding across multiple states, saying that the US expansion was “handled by a dedicated team” that considered local legalities.
• In the company’s early days, some former employees described a generally positive environment inside GoStudent:

“Everybody was passionate and enjoyed what they were doing. It wasn’t an issue to work longer hours,” one said, adding that it’s typical at startups to “give 100%.”

Problems with the verification of teachers on GoStudent’s platform

• As of 2021, GoStudent did not check tutors’ IDs in multiple markets outside the UK, current and former employees said, adding that if a tutor was kicked off the platform, they could theoretically use a fake name to sign up and be approved to join again.
• It became known that in August 2022, a 31-year-old tutor had used GoStudent to solicit nude photos from a 15-year-old Austrian boy. GoStudent acknowledged the incident and removed the tutor.
• In 2018 Anthony Canavan, a UK teacher, was banned from his classroom in 2018 after an investigation found he exchanged nudity and discussed sex with a former teenage pupil. But in 2021, he signed up for GoStudent under an assumed name. In March 2021, Canavan was appointed tutor to a 15-year-old girl. Before the first lesson, her father Googled Canavan’s name — and was shocked at the results. He emailed GoStudent, and the company removed Canavan from the platform and said they would report him to police for seeking employment with minors.
• Three such similar cases were found between 2020 and 2022, all tutors were kicked off.

What did the founders say

• GoStudent denied that the founders “have promoted and encouraged a problematic company culture related to partying and alcohol consumption.” They added that it would be fair to say that in the company’s early years it embraced a celebratory culture, however it has since rolled out a set of company values which are reflective of the company’s maturity.
• The company said that over the last 18 months it has invested in enhanced safeguarding processes, procedures and resources, including secure and trusted safeguarding software and a dedicated, trained team of Safety Officers. Furthermore, GoStudent initiated a robust background check process this year, whereby all tutors in all markets must now submit a valid criminal record check, even if this goes beyond local legal requirements.

Moreover, Xsolla continues to provide its payment processing services to its international partners including Valve, Twitch, Roblox, Smite, Ubisoft, team17, Epic Games, Playstudios, Playrix, and their users. By all appearances, this means that the Russia-based employees have access to the huge amount of data of the European and American gamers, who are using the products mentioned above.

AIN.Capital’s editor applied for some Xsolla job openings in Perm and talked to the company’s HR specialist and employees in the role as a potential candidate. Here is what we found out about Xsolla’s activities in Russia.

How it started: Xsolla announced that it was leaving Russia

• Xsolla was founded by Perm native Alexander Agapitov in 2005. On June 9, 2022, the company announced in the mass media the liquidation of its Russian subsidiary, Perm-based Xsolla Russia Holding LLC. The decision to liquidate the office was made on June 2, and director Valentina Chemodanova had been appointed chairman of the liquidation commission. However, at the time, the company hadn’t made any comments regarding the information.
• Before that, on March 17, 2022, Xsolla even donated some funds to the International Red Cross, because the team was “devastated by the conflict in Ukraine”, using the warto promote its recently launched customer support initiative titled “Babka”.

How is it going: Xsolla hasn’t left Russia, it continues to hire there

• However, even in July 2023, Xsolla continued to hire new employees in Russia. At the time, there were 12 vacancies that the company promoted on its LinkedIn, HeadHunter, and social media pages. The jobs weren’t even remote, Xsolla was hiring directly for the Perm office.
• Judging by the job descriptions, Russian employees are involved in the processing of information of Xsolla’s international clients, such as Valve, Twitch, Roblox, Ubisoft, Epic Games, Playrix, and their users.
• Additionally, the position of Junior Tax Accountant posted in July 2023 means that Xsolla continued to pay taxes for the 200+ employees based in Russia. Most likely, the company also pays taxes based on income from international clients, as the Russia IT companies must pay taxes on income regardless of the place where it is generated.

• At the end of August 2023, AIN.Capital talked about Xsolla’s operations in Russia with several people inside the company and those well-informed about it, including some sources in Ukraine. After that, at the beginning of September, the company removed the job positions in Russia from LinkedIn, but we saved screenshots.
• However, according to its LinkedIn page dated September 15, 2023, Xsolla had nearly 240 employees in Perm and other cities in Russia — evidently, the company pays taxes for them that are later used to fund the Russian war.

• In regards to Xsolla’s operations in Ukraine, it’s publicly known that Xsolla invested in DMarket, a Ukrainian company, in 2018 and exited the company at the start of 2023. There is also a legal entity with an identical name in Ukraine — Limited Liability Company Xsolla Ukraine (Xsolla Ukraine Ltd). We can assume that the company also operated and had an office in Ukraine, at least before the war.
• Furthermore, according to information provided by two anonymous sources within the company to AIN.Capital, Xsolla has even been granted the status of an enterprise of special importance by the Russian Federation. This status allows companies to exempt their Russian-based employees from military service. It is important to note that the Russian corrupt state machine makes it impossible to obtain this status without having the “right acquaintances”. Therefore, if our sources are correct, Xsolla’s managing to attain the status of “an enterprise of special importance” suggests close ties with the Kremlin and certain state apparatuses.

AIN.Capital urged Xsolla’s CEO Aleksandr Agapitov to provide commentaries regarding the Perm office and the special status, however, as of now, we haven’t received any feedback.

AIN.Capital’s editor spoke with Xsolla’s HR specialists and employees

In order to make sure whether Xsolla continues hiring people for its office in Russia, AIN.Capital’s editor wrote to the company’s HR specialists and a few employees, trying to find out more to get a job. As it turned out, Xsolla indeed offers the Junior Tax Accountant place in the Perm office.

Good day Elizaveta! Thanks for the quick answer, Ivan wrote to me yesterday that you are not ready to invite me for an interview. I will try to better my experience and skills 🙂 Also, I have a colleague that I can surely recommend to this position, so I wanted to clarify whether the accountant vacancy is exclusively remote or is there an office in Perm?
Thanks!

Greetings, ____.
There is a possibility to work from the office in Perm. Your colleague can apply on our website. We will surely look at the application and provide feedback. Good day to you! Good luck finding a job!

Conversation with Elizaveta Skipina, HR officer at Russian Xsolla.

Greetings!

My name is Ivan, and I am the HR manager at Xsolla.

We have received your response regarding the position of Junior Tax Accountant. Unfortunately, at this time, we are not able to invite you for a job interview.

We appreciate every candidate and keep each CV on file. Therefore, we will contact you when new opportunities become available. All our job openings are also posted on our Career Page.

Conversation with Ivan Vetrov, HR manager at Russian Xsolla.

Good day Semyon. My name is Roman, and I am a go developer. I noticed that you work at Xsolla. Perhaps you can tell me if the company’s offices in Perm are currently operational and whether it’s possible to work from Russia. I really want to join your team))

Hi Roman! The office in Perm is operational, and the company is currently hiring in Russia, although it’s not a large-scale hiring process. There are also job openings for developers.

Conversation with Semyon Dyagelets, Web Developer at Russian Xsolla.

Greetings Anton. My name is Roman, and I am a go developer. I noticed that you work at Xsolla and live in Perm. Could you please tell me if the company’s offices are currently open, and whether it’s possible to work remotely from Russia? I am considering the option to relocate, but if remote work is possible, that would be perfect. I would greatly appreciate your help.

Good day, the office is Perm is open. Here is a list of open job positions with the location specified: https://xsolla.com/careers/vacancies. If you have any questions, it’s better to email the address mentioned on that page.

Conversation with Anton Bortnikov, Web Software Developer at Russian Xsolla.

Why it matters?

Due to the full-scale war unleashed by Russia in Ukraine, thousands of international companies left the Russian market. This especially applies to IT companies that try to distance themselves from the terrorist country. However, Xsolla decided to sit on two chairs.

Xsolla continues to position itself as a Western company, apparently it does so to appeal to its clients Valve, Twitch, Ubisoft, Epic Games — and their users. And at the same time, Xsolla continues to work in Perm, Russia, where it processes personal financial data of its customers’ users, hires new employees, and pays taxes. For its 240 employees alone, Xsolla annually pays more than $2.1 million in taxes. Not to mention the income taxes of their world-famous clients. Moreover, the status of the “enterprise of special importance” in Russia is not simply gifted as is.

What did he do before the invasion?

Before the Russian invasion, AliExpress provided various options for cooperation on the platform for content creators in the internal social network and had budgets for such activity, as Dmytro says. These could be live broadcasts of bloggers with product tests, offline shows, guest stars, contests and sweepstakes for followers. But from February 24, 2022, such large-scale projects were stopped or frozen.

Dmytro streamed on this platform for five years and traveled to test and show new premieres from China and Turkey. But when he changed the topic of the stream after the Russian invasion, he was almost immediately banned.

Why was he banned?

In the first week of the invasion, Dmytro launched streams from a basement in the Kyiv region to show followers the truth about the war. His audience before the war consisted of viewers from Ukraine, the USA, Spain, but most of them were Russians (the total number of subscribers was 268,000). In the beginning, he hoped to somehow reach the Russian audience, to convey the truth about the war. But his first stream about the war from the basement was banned 10 minutes after the start, for 30 days.

“After the deoccupation of the region, I conducted several streams according to the old contracts in Ukrainian and canceled everything that remained, because I could no longer speak Russian,”

he adds.

He was banned by the platform’s AI “for violating the rules of the contract” that he had previously signed with AliExpress, and the official reason from the platform was propaganda of violence.

“Several of my subscriber friends were mobilized in the Armed Forces of Ukraine. Together with the remaining audience and my friends, we help the guys with the military equipment. Yesterday, we bought a new thermal imager, and what an irony — the manufacturer is ThermTec, from China. I’m not interested in restoring the account today, due to China’s position,”

Dmytro says.

AliExpress gives him the opportunity to create promotional codes for subscribers, so sometimes the blogger launches such codes:

• Gubarev is one of the most famous and odious leaders of the so-called Donetsk People’s Republic, he helped Russia to invade Ukrainian territories, was connected to Igor Strelkov/Ghirkin, and was responsible for recruiting people to the separatist armed forces.
• His books can be found on Amazon US site as well as its UK version. It is interesting that on the US site there are many one-star reviews, such as “Russian propaganda”, “they only spoiled the paper”, and so on.
• Gubarev is under sanctions from the US and British governments for his participation in Russian military aggression against Ukraine. He is also on the Ukrainian sanctions list.

• The editorial team of AIN.Capital contacted the company’s press office, stressing that Gubarev is under sanctions and is a war criminal. We asked Amazon to remove his books from sale.

Recently, Ukraine’s President Volodymyr Zelenskyy signed a National Security and Defense Council order on sanctions. This list of companies includes the Russian representative office of the international Asbis (ООО «Асбис» with an office in Moscow).

The AIN.Capital editorial team has spent several months investigating the work of the international Asbis and cites facts that may suggest that the company is continuing to operate in Russia and may also indicate parallel imports of products to neighboring countries by Asbis. Interestingly, the company itself was founded by a native of Belarus, who is also listed among the shareholders of the Ukrainian legal entity of this company.

About Asbis

Asbis (ASBISc Enterprises Plc), an international holding company based in Limassol, Cyprus, is a major distributor of computer hardware, electronics, components, and software. Among the brands Asbis works with are Apple, Intel, Microsoft, AMD, Western Digital, Samsung, Dell, Acer, Lenovo, and many others.

The company was founded in 1990 by a Belarus-born entrepreneur and Cyprus citizen, Siarhei Kostevitch. It initially distributed Seagate Technology products to the countries of the former Soviet Union and Eastern Europe. It was incorporated in Cyprus in 1995. The company’s first franchise partners appeared in Russia and Kazakhstan in 1996, and in 1997, it opened an office in Ukraine and reached a turnover of $100 million.

In 2021, Asbis announced a revenue of $3 billion, had offices in 27 countries, and had over 270 high-tech brands in its portfolio. And for 2022 (financial results for the four quarters have not yet been announced), its forecasts range from $2.2 to $2.4 billion.

Asbis is a leading distributor of Apple products to Ukraine, Kazakhstan, Georgia, Azerbaijan, Uzbekistan, and Armenia. Until recently, only Asbis delivered legal Apple products to Ukraine (before it, ERC did it). With the opening of an official representative office in Kyiv in 2021, Apple began to transport its goods to Ukraine independently, but Asbis still participates in the supply chain. Previously, Asbis received devices from Apple at its warehouses in Prague and transported them further across the border, dealing with customs clearance. But now Apple brings the devices to the Ukrainian Asbis warehouse, and then the company ships them to partner stores.

Asbis is a big company in the Ukrainian market. However, its owners include a shareholder from Belarus. Also, after more than one year since the start of the full-scale invasion, the company has not left the Russian and Belarusian markets, although, according to the company, it has stopped operations there. Apple, for example, stopped selling in Russia in early March 2022.

Shareholders

The company shareholders are a Greek entity and persons of Belarusian origin. The Asbis CEO, an entrepreneur, Siarhei Kostevitch (a Cypriot with Belarusian roots), founded it 30 years ago and possesses 36,8% through KS Holdings Ltd:

The rest of the company owners are also its Board of Directors and management members. For example, Marios Christou (0,83%) is CFO, Konstantinos Tziamalis is Deputy CEO, Julia Prihodko is Chief Human Relations Officer (who built her career at Asbis Ukraine), etc.

It used to have other investors, for instance, Alpha Ventures SA, a venture subsidiary of the Greek Alpha Bank (it has no connection with the Russian group with a similar name) and Black Sea Fund: Asbis was getting their funds until 2002. According to the financial statements, Alpha Bank had 6,6%, and Black Sea Fund 10%.

This Greek Alpha Bank even made a special statement at the beginning of the full-scale Russian invasion that it had no connection to the bank operating in Russia, Belarus, and Ukraine. It is one of the oldest banks in Greece, established in 1879. Now it is a part of the Alpha Ventures SA group.

However, some hints on the Russian Alpha and its beneficiary, Mikhail Fridman, remain. The Chief Human Relations Officer and Executive Director of Human Resources at Asbis, Julia Prihodko, is another Board of Directors member but holds no shares. She was Head of the Human Resources Department at Alpha Insurance, a Ukrainian insurance company, from July 2009 till 2015. As of January 2023, Alpha Insurance belongs to ABH Holdings SA (ABHH). And the beneficial owner of Alpha Insurance (Ukraine) is Mikhail Fridman (a Russian oligarch under sanctions of the EU, Great Britain, Ukraine, and other nations due to his Russian business connections).

According to the data published in 2020, Asbis Global used the banking consulting services of the Russian Alpha Bank, Sberbank, and Zenit Bank, and its Russian subsidiaries had loans in Sberbank.

A Cypriot of Belarusian origin, Yuri Ulasovich, is also among the ex-shareholders of the company. In the Annual Report 2020, he is mentioned as a Board of Directors member and holder of a 0,38% share. Ulasovich obtained a master’s degree from the Novosibirsk Higher Military Command School and the Military Academy of the General Staff of the Armed Forces of Russia. Since 1995, he worked for Asbis as Regional Sales Director. In 2004, he got the promotion to the Vice-President of Marketing. Since 2015, Yuri has been COO. But not among shareholders anymore. The Asbis founder, an entrepreneur of Belarusian origin, a Cypriot Siarhei Kostevitch (through ASBISc Enterprises Plc), is also the beneficial owner of a Ukrainian company, ТОВ ПІІ «Асбіс-Україна» (Asbis-Ukraine LTD):

The AIN.Capital editorial team isn’t aware of any information confirming that Siarhei Kostevitch has only Cyprus citizenship.

Does Asbis operate in Russia and Belarus?

Asbis declared its support for Ukraine, established a €2 million humanitarian fund, and delivered gear, generators, medical aid, ambulances, and other vehicles to Ukraine during the war.

Before the full-scale Russian invasion, the Russian Federation and Ukraine were the largest markets for Asbis. However, the company stated in its papers that the Russian-Ukrainian war began only in 2022, not 2014. In 2021, Russia was the No. 1 Asbis market with $576 million; Ukraine ($475 million) and Kazakhstan ($383 million) were in second and third place, respectively.

So, the company earned about 20% of its income in Russia before the war started. Asbis also had 100% owned “daughters” in Russia and Belarus (see the Annual Report 2021):

• ООО «Асбис» (Asbis LLC) (Moscow);
• ООО Must (Must Ltd.) (Moscow);
• ООО Avectis (Avectis Ltd.) (Moscow);
• FPUE Automatic Systems of Business Control (Minsk);
• Asbis Close Joint-Stock Company (Minsk);
• E-Vision Production Unitary Enterprise (Minsk);
• Training center for managers and specialists in the IT industry (Minsk);
• Breezy LLC (former Cafe-Connect, Minsk);
• MacSolutions (Minsk);
• Vizuators LLC (Minsk) and others.

It also has a number of Ukrainian entities: ТОВ ПІІ «Асбіс-Україна» (Asbis-Ukraine Ltd), ТОВ «ІОН-Україна» (iON Ltd), ТОВ «Брізі» (Breezy Ltd), ТОВ «Айсаппорт» (iSupport Ltd, former Asbis Service), etc.

In 2021-2022, Asbis partly shut down its Russian and Belarusian businesses. Officially, Avectis offices in Moscow and Minsk were closed in November 2021. The Belarusian company Avectis, acquired by Asbis via Atlantech in 2017, worked with Belarusian state-owned companies and large enterprises such as MAZ or Belshina.

In May 2021, Belarusian Visalia LLC, Vizuator LLC, and Vizuators LLC were also terminated. The Must company, registered in Moscow, was sold in July 2022.

The consolidated report for Q3 2022 describes the consequences of the war the company faced and says that Asbis shrunk its presence in Russia and Belarus.

“A country-by-country analysis confirms that a major decrease in sales in Q3 2022 was noticed in the markets directly involved in the invasion of Ukraine, i.e., Russia and Belarus, where the Group has decided to significantly reduce its business.”

Before it invaded Ukraine, Russia was No. 1 in sales. And only after a year it ended beyond the TOP 10 markets. According to the interim report, the Russian market decreased more than twice: The company earned $107.1 million for six months of 2022 (compared to $238 million in 2021).

The financial results in Q3 2022 showed that sales in Russia were lower than in the TOP 10 markets. Kazakhstan became a new TOP 1:

The consolidated report for Q4 2022 says that as of December 31, 2022, Asbis still had firms operating in Russia and Belarus: ООО «Асбис» (Asbis LLC) and FPUE, E-Vision, Asbis CJSC, Breezy LLC, Maksolutions in Minsk. According to the report, “the war between Ukraine and Russia” created uncomfortable conditions for business, and sanctions on Russia “limited sale opportunities for specific products.”

It also noticed that currency exchange rates in countries where the company is present affected the revenue, including the Russian Ruble. According to the report, the Group ceased its operation in Russia.

Its sales in Russia were $134 in 2022. Considering the fact that the company earned $107.1 for six months of 2022, it continued its business in Russia, which resulted in $27 million in Q3-Q4 sales.

At the same time, the numbers in Russian-neighboring markets were remarkable. For example, Armenia showed over 217% growth, and Georgia, 124%. The sales in Kazakhstan increased more than twice. Azerbaijan, which was beyond the TOP 10 in 2021, now became one of the leaders. All this could indicate a parallel import to Russia emerging after many international companies left the Russian market.

In February 2023, David O’Sullivan, the EU’s newly appointed sanctions envoy, told the Financial Times that big increases in trade with countries in Russia’s neighborhood raised questions as to whether products hit by sanctions were entering the country via the back door. Armenia and Kyrgyzstan are among those with sharp increases in western imports and rises in exports to Russia. Asbis declares, however, its straight conformity with all the sanctions on Russia and Belarus without naming the reasons for the rises in sales in Russia’s neighborhood.

When this article was published, Asbis had at least one company in the Russian Federation, ООО «Асбис» (Asbis LLC). Its website in the first-level domain (which is impossible to get without trademark rights) continues to work. And its offices in Moscow, Kazan, and Rostov-on-Don publish some job openings for developers, administrators, and support specialists. There are old vacancies dated 2022 and new ones from March 2023.

On the Russian website, the vendor list still contains Yandex, which is under sanctions. However, in the report Q4 2022, Asbis noticed multiple times that the company strictly follows the sanctions and does not sell goods to entities under sanctions.

A statement of the company

In response to a question about its presence and activity in the Russian and Belarusian markets, Asbis told AIN.Capital that

• the company doesn’t work in Russia, but ASBIS Group still owns the Russian ООО «Асбис» (Asbis LLC) (which does no operation).
• Asbis follows all the EU sanctions on Russia and Belarus and has ceased selling the sanctioned goods in both markets immediately. Asbis and its vendors removed the inventory from Russia and returned it to suppliers.

Racist slurs in the Yandex source code

The editors of AIN.Capital found examples of the use of racist vocabulary in the merged code of Yandex. You can check their presence, in particular, in the file Antirobot, in ./scripts/learn/sky_matrixnet.sh

The first screenshot shows a racial slur in the name of the function stop_n****rs (n-word) that terminates zombie processes (processes in Unix systems that are already executed but still present in the list). Here the function has to terminate such processes and Yandex developer described it as terminate all n****rs. Furthermore while executing this function shows a message like ‘Please wait until all n*ggers are terminated’. The second screenshot shows that a variable previously known as slave (the western world refused to use master/slave terminology long ago) has been renamed to n****r.

Twitter users have already found the probable author of the code: company developer Ilya Trofimov (and his Linkedin profile) by mail on the second of the screens.

Propaganda in the search engine

These are far from all the curiosities that the IT community managed to find in the code of Yandex services. For example, here is a thread about how the search algorithms were changed so that it did not show results offensive to Putin, and also so that people did not see associations of the Z symbol with Nazis:

Details about the leak

The files in the archive are dated February 24, 2022, and, according to the owner, were stolen by him back in July 2022. (Dumpforums is an organization of Ukrainian hackers that previously claimed responsibility for hacking a number of Russian banks and state-owned enterprises).

The archive, which is available for anyone to download, contains internal Git repositories with the code of 79 Yandex’s services and projects, as well as internal documentation and API access keys. The size of the archive is 44.71 GB.

“Yandex is one of largest IT companies in Russia. Within country it provide wider range of services than Google. Imagine one company that replace Google, Uber, Amazon, Netflix and Spotify,”

the developer, and tech enthusiast Arseniy Shestakov noted in his blogpost.

In particular, the fund was previously known as Moscow-based Buran Venture Capital with Russian oligarchs as LPs and vigorous activity on the Russian market.

Relying on the open source information, we investigated Flashpoint’s year-to-year activities and are sharing the story of its transformation from $10 million Moscow-based Buran VC to the international technology investment firm with $500 million AuM and 7 offices worldwide, still closely tied to Russia.

Headquartered in London, Flashpoint describes itself as an international technology investment firm, which provides funds to tech companies founded by entrepreneurs from Central and Eastern Europe, Baltics, CIS, Finland, and Israel. According to the data from the Flashpoint website, it was launched in 2012 by Michael Szalontay and Alex Konoplyasty.

“Our story began in 1998 when we – Michael and Alex – met at university and lived in the same dormitory. Having studied economics and finance, we had a student ambition to work in international finance but as our careers progressed, we realized that our dream was to be free in our professional creativity,”

the website states. 

It forgets to mention that Michael Szalontay and Alex Konoplyasty, the co-founders and General Partners at Flashpoint, met each other at the Moscow State Institute of International Relations (MGIMO), which they graduated in 2003. There is also no information about the fact that Flashpoint was known as Buran Venture Capital until April 2019, when it was rebranded.

Moscow-based Buran VC was launched in 2010

Michael Szalontay and Alex Konoplyasty launched Buran Venture Capital in 2010. It was a $10 million venture capital fund with a focus on investing in projects ​​from Russia, the CIS countries, and Israel, as Konoplyasty earlier told Kommersant.ru.

In 2012, Buran VC registered a legal entity in Moscow. To be more precise, “Buran Financial Consultant” Ltd. (ООО “Буран Финансовый Консультант” in Russian) appeared on April 9, 2012. That year, the fund also welcomed a new advisory board member and the huge LP, Mail.Ru Group co-founder and Russian investor Mikhail Vinchel. He joined Buran Venture Capital together with 7 undisclosed backers. Grigorij Finger, another co-founder of Mail.Ru Group, also joined Buran VC as an investor.

In 2015, the firm launched its second $16 million fund. The investment was led by O1 Group. It is a private holding company investing in the Russian real estate and financial sectors, owned by Russian oligarch Boris Mints. Buran VC received several million of dollars from Mints. 

Moreover, as of March 2021, the data regarding the LPs’ structure from internet archive Wayback Machine shows the following:

AIN.Capital sent a list of questions to Flashpoint concerning Russian LPs. We asked the fund about Russian billionaire Alisher Usmanov, who is listed as one of the Flashpoint’s investor and who was hit with EU sanctions following the Russia’s full-scale invasion of Ukraine. The answer we received was vague:

“The information on LPs that you mentioned does not reflect the actual or past structure of shareholders of Flashpoint (rebranded from Buran back in 2015 when the company stopped its investing activity in Russia and HQd in the UK). So since then, Flashpoint hasn’t made any new investment in Russia,”

the fund responded.

Furthermore, the information about the rebranding and shutdown of the investment activity in Russia in 2015, which the fund provided us with, didn’t correspond with the facts we revealed.

What is more interesting, responding to the comment about LPs under the TechUkraine’s post on LinkedIn, Flashpoint wrote the same answer it provided us, but with 2014 as the year of rebranding and stopping its activities in Russia.

Buran VC was rebranded to Flashpoint in 2019. It continued to operate in Russia until September 2022

Flashpoint’s answers only raised new questions.

Buran VC officially changed its name to Flashpoint in 2019, announcing the news on its Medium blog. Interestingly, when AIN.Capital asked the firm to comment on rebranding, we were told that it happened back in 2015. Our question about the reasons why the public information in official press releases in international and Russian media differed so much at the time, was just ignored.

Along with the rebranding, Flashpoint also announced the opening of a new €50 million fund in 2019. This time, the press release stated that the fund invested in software startups across Finland, Baltics, CEE, and Israel.

It didn’t mention Russia, despite the fact, Flashpoint continued to support Russian projects. Although, the company said to us that it stopped investing in the Russian market in 2015, as AIN.Capital quoted the fund’s words earlier. For example, in 2021 it made follow-on investments in online cinema service ivi.ru and same-day delivery service Dostavista among others.

In 2022, Flashpoint also invested in Russian startups 

• In January 2022, Flashpoint joined the Series A round for Russian logistics startup Fura that received almost $1 million. It is operating across Russia and the US. As Forbes Russia informs, in 2021 the total turnover of the company on all the markets amounted to $45 million.
• In June 2022, Flashpoint invested in London-based regtech startup ClauseMatch that was launched in 2012 by Evgeny Likhoded and ​​Andrey Dokuchaev. According to the website, it also has offices in Singapore and New York. As AIN.Capital revealed, ClauseMatch also has a team and office in Russia.

This is proved by the data from the LinkedIn profile of the ClauseMatch employee, Administrative Head of the startup. It shows that the startup had an office in Saint Petersburg at least until August 2022.

AIN.Capital asked Flashpoint about its activity on the Russian market. The company said that it has not invested in Russian startups since 2015. When we asked it to explain the investments mentioned above, the firm declined to comment.

In fact, while Flashpoint was talking about conquering the UK, CEE, Baltic markets on the pages of English-language media, its Russian legal entity continued to operate under an old name Buran VC. According to the state registers base, the liquidation process of “Buran Financial Consultant” Ltd. (ООО “Буран Финансовый Консультант” in Russian) was completed in September 2022. 

That means that Flashpoint continued to pay taxes in Russia for a while. The data from the Russian Federal Taxation Service shows that in 2021 the fund paid almost $73,000 in taxes.

To date, Flashpoint has offices in New York, Tel Aviv, Budapest, Warsaw, Riga, and Nicosia. It has $500 million AuM across 6 funds with more than 120 investors. Its portfolio has over 50 companies worldwide, 3 of them Ukrainian — Preply, Allset and AllRight.

At the end of November, besides the intention to launch a $75 million Ukrainian Tech Fund, Flashpoint also said that it wanted to open an office in Kyiv and raise the number of Ukrainian projects in its portfolio up to 20 until 2027. 

AIN.Capital team is also curious: what makes Flashpoint so interested in Kyiv and Ukraine right now. The fund declined to discuss this issue as well.

The company’s response to the war

• GitLab was founded by Kharkiv developer Dmytro Zaporozhets and initially developed as a company in Ukraine. Later it entered the international market. The company successfully developed and raised investments. And in October 2021 it went public on the Nasdaq stock exchange. Following the IPO, Zaporozhets resigned from the management at GitLab. Now it has a distributed team and offices in different countries in the world.
• On March 11, 2022, the company announced that it has stopped operations in the Russian and Belarus markets, but will continue to work with existing customers. “As a company, we are deeply saddened by the unprovoked and unjustified Russian military takeover of Ukraine, the horrific incidents of violence against an independent nation and people, and its dire impact on the entire region, including our team members, their families and friends,” company’s CEO Sid Sijbrandij said back then.

The company is still working with Russian businesses that help its military

At the same time, Russian businesses continue to hold purchase tenders of GitLab services. At least one business, which is also a supplier for the Russian military industry, are among the company’s Russian clients.

• In particular, we are talking about the company Laboratory 50. It cooperates with enterprises of the military-industrial complex of Russia. Among its projects are combat control systems for frigates, platforms for stands and training simulators for the Russian army personnel. You can read more about these projects here.
• At least one of its products, the Mono software package for Astra Linux Special Edition, is made by GitLab. It has a repository on this platform, updates were released regularly (even after the start of the war). It also has a compliance certificate from the Ministry of Defense of the Russian Federation No. 5490 dated 24.11.21. Meaning, it can be used by enterprises of the military-industrial complex of Russia.
• Furthermore, some data from Russian websites about state tenders indicates that state institutions and commercial enterprises are looking for specialists who can work with GitLab. For example, look at the tender from one of the Tatarstan banks (a Russian republic), announced in May of this year. Here is the purchase tender of GitLab Premium from the state-owned enterprise Atomenergoproekt, announced at the beginning of March 2022 (this enterprise is part of the state corporation Rosatom).

The AIN.Capital’s editorial office emphasizes that due to the numerous war crimes that Russian troops have committed and are committing on the territory of Ukraine, GitLab’s management should make the decision to completely withdraw from the Russian and Belarusian markets.

Together with Molfar OSINT community, the Editor of AIN.Capital investigated who really helped Replika to succeed and how is it linked with Russian oligarchs.

Replika is a product developed by the Luka company. Luka was founded by two young Russians Eugenia (Zhenya) Kuyda and Philip Dudchuk, who then moved to the US, managed to get to Y Combinator with their idea and during the next two years made four pivots and raised more than $11 millions from American investors. Quite a remarkable success story.

Today, the main service that Replika offers is a psychological support through the digital avatar. Users can chat with an artificial friend, who provides not professional, of course, but conversational support. Like a good friend that is willing to listen to you and sympathize.

After the beginning of the full-scale invasion of Ukraine, Replika’s users noticed an aggressive Russian propaganda in chatbot’s replies. Check out the screenshots below.

The Molfar team chatted with the bot for several days to make sure it does really answer that way. And yes, it does.

The Russian trace

Firstly, the “American startup with Russian roots” has an office in Moscow. The Luka.ai domain is also registered in Russia. But that is not the point. The point is, the “remarkable success story” is full of complicated coincidences.

Luka with its Replika was one of the first of a very few Russian startups to join Y Combinator. Lucky? Or maybe not just luck itself. In 2012, Russian billionaire and investor Yuri Milner announced The Start Fund, which additionally invested $150,000 into Y Combinator’s startups. That kind of protectorship could have encouraged Y Combinator to pay close attention precisely to the Russian startup in the list. For Milner, that move has become a good one to gain a foothold in the US venture market.

There are some even more interesting coincidences. Luka is a popular Russian name. In particular, it is a name of Russian oligarch’s Sergey Adonyev’s son. Sergey is a former owner of the Russian telecom companies Yota and Megafon. Zhenya Kuyda calls him her mentor and teacher. Below you can see the photo of that mentor along with Russian president Vladimir Putin who started an unprovoked war against Ukraine with genocide of its people (because Bucha massacre is real, just google to be sure it has all signs of genocide).

One more interesting fact is that a domain name marsfieldcapital.com, which belongs to Marsfield Capital, registered on ekuyda@gmail.com email. The fund is currently managing the assets of Telconet Capital, owned by Adonyev and other co-owner of Yota Albert Avdolyan.

Eugenia’s father is Igor Kuyda. He is suspended of embezzlement. While being chairman of Ekoprombank, he has opened credit line for 215 million rubles and gave the money to the former owner of the bank Volodymyr Nelyubin, who never gave it back and was sentenced to six years in prison. Kuyda himself was wanted, surrendered to the police in 2019 to testify against Nelyubin. Now the case is in court, the man was released on bail of 20 million rubles.

What a fascinating background for the successful Y Combinator alumni startup.

Why is it important

Since its launch, Replika raised more than $11 million. Sherpa Capital, Y Combinator, Ludlow Ventures, Khosla Ventures, as well as Zynga’s founder Justin Waldron and Evernote’s founder Phil Libin are among its investors.

Now, having all the financing needed, Replica is spreading fakes about war in Ukraine.

“All soldiers participating in the invasion of Ukraine should be subjected to a war crime tribunal,” Anonymous says.

This database was leaked at the beginning of the war in Ukraine. The Ukrainian hacker community InformNapalm reported and, in fact, leaked the database.

What is it for

According to InformNapalm, the majority of the database has been posted by Ukrainian hackers E_N_I_G_M_A, only after the community added more data from its own investigations. The database was first leaked on February 25 in three tables Excel format and contained info on over 100,000 Russian troops.

InformNapalm states that the database was relevant as of 2018, which means it may not include those who signed contracts after 2018. And on the other hand, it may contain data on those who served before the current war.

“The information should be treated with caution, but the database can be used to verify data on military units, military passport data, etc.,” the community says in the statement.

On April 1, this database was published by Ukrayinska Pravda, citing the Center for Defense Strategies of Ukraine (a non-profit public organization). The news on Ukrayinska Pravda was listed as the source of the Anonymous leak. The source has not been disclosed in the article but is characterized as “reputable.”

How to use it

The data may be needed to find each war criminal and, depending on the extent of their involvement in the war, sentence each of them. You can check out the full data here.

You can search the table with keywords. For example, put “64 омсбр” (Separate Motorized Rifle Brigade). The database gives the results for 1,648 people who have served or are serving in this brigade.

“Some have resigned, but some of the officers are still serving. And we have addresses and passport data in order to narrow the search and find those involved in the genocide in Ukraine,”

the volunteers explain.

What is InformNapalm

InformNapalm is a hacker community founded in March 2014 during Russia’s armed aggression against Ukraine in Crimea. Currently, InformNapalm has teams from 20 countries on a volunteer basis who conduct OSINT research, translate and distribute publications in foreign languages, and conduct media, diplomatic, and educational work. Since its inception, the community has published more than 1,800 studies. On February 24, 2022, InformNapalm was reformatted for military needs.

The founder of the community and the editor-in-chief of InformNapalm.org is Roman Burko, a displaced person from Crimea. Irakli Komakhidze, a former Georgian soldier, is a co-founder of the community and the author of many OSINT studies.

You can read more about the community here.

On February 28, the Russian media showed a photo of a “kindergarten occupied by the Armed Forces of Ukraine.” On March 1, the Russian Ministry of Foreign Affairs declared the same building as “a maternity hospital occupied by the Ukrainian Armed Forces.” However, the shape of the building shown in the Russian news does not match the shape of the Mariupol maternity hospital No. 3 hit by a Russian missile.

Key facts of the case:

• Russia used fake news in advance to have reasons for shelling.
• The destroyed hospital differs from the building shown by the Russian media.
• The distance from the bombed hospital to the building shown by Russians is 10 km.
• There was no military personnel in the hospital, as was said by the Russian government. There was also no military machinery, weapons, or equipment.
• Despite the Russian reports, staff and civilians, including pregnant women, have been injured in the hospital. Russians have also damaged civilian vehicles belonging to the staff and patients in the hospital’s courtyard.

Chronology of events:

02/28/2022 – The pro-Russia VK page Военный осведомитель (Military Whistleblower) published a photo of the Ukrainian soldiers at a civilian facility in Mariupol.

03/01/2022 – The Russian TV channel Россия 24 (Russia 24) used a photo of the “occupied” building in Mariupol in its video (YouTube, accessed via VPN or Tor).

03/07/2022 – The Russian representative, Vasily Nebenzya, during the meeting of the UN Security Council, said that local nationalist battalions drove people out of a maternity hospital, opened fire there, and destroyed a nursery school in the city.

03/09/2022, 1:05 pm (Moscow time) – During a briefing, the Russian Foreign Ministry spokesperson, Maria Zakharova, reported that: “in Mariupol, the Ukrainian national battalion, chased the staff and patients out of the maternity hospital, set up firing positions inside the building.”

03/09/2022, 4:00 pm (Kyiv time) – The Russian Armed Forces bombed the central part of Mariupol, including the Woman & Child Health Center with Pediatric Consultative Diagnostic Clinic and the maternity ward of City Hospital No. 3.

03/09/2022, 7:38 pm (Moscow time) – the newspaper Комсомольска правда (Komsomol Truth) published an article saying that, in late February, Ukrainian soldiers took up combat positions in Maternity Hospital No. 1, while civilians were sent to other facilities or their homes. The article included a photo of the militaries next to an unknown building, taken from the VK group Военный осведомитель (Military Whistleblower), which had been broadcast by the TV channel Россия 24 (Russia 24) eight days earlier.

Russia’s propaganda mistakes

1. Russia used fake news in advance to have reasons for shelling

Russian sources started reporting on the occupation of the hospital by the AFU as early as a week before the bombing, most likely using a photo of a nursery school instead of a hospital. Here is a satellite image of the territory of hospital No. 3, which was actually bombed:

The photo that was shown by the Russian TV channel Россия 24 (Russia 24) on March 01, 2022:

Комсомольска правда (Komsomol Truth), March 09, 2022:

2. The destroyed hospital differs from the building shown by the Russian media.

Note that Военный осведомитель (Military Whistleblower) on the 28th of February reported that it was a kindergarten in the photo, not a maternity hospital:

The typical form of the building also suggests that there is indeed a children’s educational institution in the photo. Here are examples of such buildings on the territory of Mariupol:

Here is a photo of the hospital before and after the bombing by the Russians.

As we can see, the same yellow-green medical buildings were bombed:

We also draw attention to the fact that Google Maps shows that on the territory of the Pediatric Consultative Diagnostic Clinic there is no object of such a shape as in the photo of Комсомольская правда (Komsomol Truth):

A similar building is next to Maternity Hospital No. 1, which was shown by Комсомольская правда (Komsomol Truth). But its shape and surroundings are completely different from the photos shown by the pro-Russian media.

The building from the photo with the military personnel has only one ledge in the middle. But as we can see on the map, the buildings are completely symmetrical. Also, there are three fir trees near the building, but they are absent in the satellite image.

3. The distance from the bombed hospital to the building shown by Russians is 10 km.

In fact, the attack was made on the Pediatric Consultative Diagnostic Clinic, which is located 10 km from Maternity Hospital No. 1, mentioned in the article of Комсомольская правда (Komsomol Truth).

4. There were no military units in the maternity hospital

Комсомольская правда (Komsomol Truth) reported: “Since the start of the military operation, this Mariupol maternity hospital has been occupied by two companies of the 36th Marine Brigade, and all patients and employees have been moved to other facilities, and some went home.

But the video of the destroyed hospital inside does not show any signs of weapons, military equipment, etc. But you can see specialized medical equipment, the personal belongings of the patients, and the blood of the victims:

Also, despite the Russian media’s information about the military personnel in the maternity hospital, there were no military vehicles on the hospital grounds. But we can see burned civilian vehicles of the staff and patients on this video, another video, and one more video.

5. The victims

Quote from the article of Комсомольская правда (Komsomol Truth):

“Can you imagine the number of corpses and casualties that would have been there if an aerial bomb had hit the courtyard of a functioning hospital? There is no doubt that the Ukrainian side would have shown them all. At least as they bandaged them or carried them to the ambulance. But where are they?”

Okay, let’s watch one video, another video, and one more video. If it is not enough, let’s see the photos of the evacuation of the victims:

Here is a photo of this woman from her husband’s Instagram account dated January 24, 2022:

It should be noted that as of March 10, 2022, 7:55 am, according to the State Emergency Service and the words of the adviser to the chairman of the Mariupol City Council, Petro Andriushchenko, the number of victims is 17 injured women, three dead people, including one child.

The article was prepared by the Molfar team

Why such an enormous debt?

In 2018-2019, Ambisafe developed several cryptocurrency-related products, especially with Ether: the Orderbook exchange with smart contracts, a cryptowallet, and complement SaaS services. One of its projects was asset tokenization. For example, Ambisafe planned to tokenize SpaceX shares through the Unicorn Equities fund.

Their idea was to turn USPX tokens on the Ethereum blockchain into fund assets, then purchase SpaceX shares for received money to turn token holders into stakeholders of the fund that owns SpaceX stocks. But the project didn’t succeed, and in January 2022, members of the fund’s official chat asked the administrators why SpaceX disappeared from the fund’s website and Orderbook’s website.

After the ‘crypto winter’ 2018, when the value of most cryptocurrencies fell (Bitcoin, after a good race in 2017, lost 50% just in a month), the company shrank from 150 down to 15 persons. Some of them were fired, the others left, and some worked with a lower salary for a while.

Now the company recruits new specialists for its cryptocurrency products, including the Orderbook platform. At the same time, dozens of people who left the company in 2018-2019 are still waiting for their salaries. The debts vary from thousands to tens of thousands of dollars per person. And the total debt is about $200,000.

What do the ex-workers say?

The AIN.UA editor had conversations with a few ex-workers of Ambisafe who are still waiting for their wages. The company executives first created a private chat on Telegram for all non-paid 35 persons to inform them about updates. But after July 2021, there are no new messages about money from the management.

During interviews with AIN.UA, most professionals asked for anonymity. That’s why we publish some comments with hidden names. We had a separate conversation with every ex-worker, but in general, details are typical for all stories: they worked for the company in 2018-2019, then started delays with payments, some of them left earlier, some later, but most of them haven’t seen their money yet.

Artem Yushkov worked at Ambisafe as a Senior DevOps Engineer from February 2018 until July 2019. On January 1, 2019, he said, the management announced decreasing salaries for all workers, but with a promise to compensate everything in a few months. Instead, at the beginning of 2019, the company started to delay payments, and soon after that, they stopped paying at all by constantly postponing the payments. Finally, the leaders explained that they would pay all debts in a month thanks to new clients, but it never happened.

“The last promise was in summer 2021 that they would start pay debts in parts [Editor’s note: see the screenshot below — editor]. But there was no payment, and CEO [Editor’s note: Andriy Zamovskyi] has remained silent since then. And I have wondered reading positive feedback about the company on DOU,” Artem said. According to our sources, the company owes him $12,500, which is not the highest debt amount.

Similar stories tell other ex-workers. One of them, remaining anonymous, said that he joined Ambisafe in 2018 and was fired in May-June 2019, together with most essential staff. He remembers that problems with payments have begun even earlier — in winter 2019, and after the new year, they paid only a half of the salary. The company’s debt to him also hits about $12,000.

Another Ambisafe’s ex-employee, Ivan, worked as a Technical Project Manager for a few years before the discharge in 2019. When the problems with payments started, he remembers that the CEO of the company with almost 150 employees organized a general meeting and fired 70-80 people just during a day.

Another ex-team member provided more details about this moment: “The culmination happened in May when they called an all-hands meeting and said that they failed with an investor, and most employees will be fired. The company promised to pay debts as soon as they had funds. After off-record conversations with the leaders, it was clear that the investor they negotiated with had no money and wanted to attract third-party investors to earn a bonus for this deal as an intermediary.”

Ivan was fired among the last. Leaving the company, he took a chair and an old MacBook as compensation for the debt. It was less than 20%, and the company still owes him about $5500, he said.

He also wondered at positive feedback about the company and the information about hunting new staff: “Sure, we all wanted to get our honestly earned money. And we didn’t want other professionals to get in the same situation as well,” he added.

A Python developer who worked for the company at that time agreed to comment on the situation anonymously. However, he remembers that the company allowed people to take work devices as payment during the massive discharging. He had taken a laptop, but then the managers asked him to pay for it. After a chat with the CEO, they revoked their claims.

Recently, a recruiter offered the developer a job at the Orderbook exchange for $2,000-4,500 per month. This is the project of the same company that didn’t pay him his salary for already two years.

What do the company reps say?

The AIN.UA editorial board asked the company’s CEO, Andriy Zamovskyi, about the current situation. He confirmed that the company has debts to its ex-workers. He said that the main reason for those problems was the ‘crypto winter’ in 2018.

“It happened at the time that all remember as the ‘crypto winter’ 2018. The same year, the big ICO bubble exploded. Most cryptocurrency companies didn’t survive it,” he added.

Zamovskyi confirmed that the company shrank from 150 to 15 within a year. A part of employees agreed to continue to work with lower wages with a late compensation, considering the business will go up.

“Unfortunately, the business didn’t go up, and we needed to fire all of them. Everyone knew that the company was not doing well, and there were certain risks. As CEO, I decided not to declare bankruptcy and try to develop a new business line and pay debts while most companies just closed, saying “sorry.” We pay our debts, but the income generated by 150 and 15 people is not comparable; that is the cause of such a low temp of payments,” summarized the CEO.

What happened

The SFS presented in its release a scheme of how the company should have organized an illegal online casino in Ukraine for foreign markets where such activity is prohibited.

“During the investigation, our officers found out that in Kyiv, over 60 people worked in a single office — both Ukrainian and foreign citizens, the legality of whose stay in Ukraine is checked at the moment,” said the SPS release.

The main business areas of the company are the development and administration of online casinos and the support for several gambling provider sites.

According to the report, in the past year, the non-taxable turnover of this business in Ukraine was over $30 million. The cash was supposedly transferred with various financial means, including cryptocurrencies.

Their business went through several individual entrepreneurs registered within Ukraine, and according to the authorities, they were used to hide violations. In particular, the casino runners haven’t declared the real income of the casinos and correspondingly not paid taxes. During the search, the SFS officers discovered gaps in the company’s employee tax reports and large amounts of not paid social tax.

The officers seized unaccounted cash, seals of a non-resident company, individual Ukrainian entrepreneurs and legal entities, document drafts, hard drives, computers, etc. The investigation continues.

What about online casino

The “discovered” scheme of a casino, working in several countries illegally, is mentioned in the SFS release several times. But it is stated only at the end of the article that Ukrainian authorities did search the company because of non-paid taxes. However, discovering illegal casino businesses working from Ukraine abroad does not belong to the jurisdiction of the SFS of Ukraine. There is also no information about the participation of the cyberpolice in searches.

It is also noteworthy that two weeks before the visit, the legal entity of this online casino — SEO CORE LLC — received a gambling license in Ukraine. “This information looks especially strange in the context of the fact that on September 25, 2021, the Ukrainian SFS should end its existence, pending the creation of a unified Economic Security Bureau, the ESB,” said a source familiar with the situation in the market.

About Gamingtec

In the release of the SFS have been published photos of the Kyiv office of Gamingtec. Here are pictures of the Fiscal Service:

And here’s a photo from the Gamingtec website (turn attention to the wall):

It is a developer of casino and betting platforms and a provider of payment solutions, marketing tools, and technical support. By the way, the office looks in the photos of the SFS like a call center, not a development office. Now there are over 3,000 games based on the Gamingtec platform. The company is registered in London and has a large R&D center in Kyiv near the Universytet metro station. There work about 80 employees. In total, the company has 100+ workers.

In response to a request of AIN.UA about the search, Gamingtec replied that the SFS came to the office of SEO CORE, which is a partner of the company in gambling software development and has a special Ukrainian license:

“Gamingtec is neither a Ukrainian company nor legal entity but an umbrella brand for the producer of online gambling and iGaming software. Therefore, we are not talking about a search at Gamingtec. So, there was a search at SEO CORE, which has a Ukrainian license for gambling software development. SEO CORE is among the partner companies of the Gamingtec brand.”

Reasons for the search

The Gamingtec‘s management believes that the SFS did it due to motives of corruption.

“Although just a few days ago, SEO CORE got the gambling software development license, this investigation looks like a reaction to granting that license from the Ukrainian Gambling and Lottery Commission (UGLC).

That incident in Ukraine will not directly influence the operation of companies that use the Gamingtec brand worldwide. It may harm the reputation of Ukraine as a jurisdiction for software developers. We are thinking about a recommendation to worldwide Gamingtec partners not to consider Ukraine in their further software development projects,” said a representative of Gamingtec.

Gamingtec also confirmed that they already think about leaving Ukraine and terminating the cooperation with Ukrainian companies.

Details from SEO CORE

According to the company representatives (we did not receive a copy of the document), the court decision contains only the address of the office rented by SEO CORE but not its name. There are also multiple charges against the company:

• about 100 illegal workers of Turkish nationality
• illegal transactions with cryptocurrencies
• avoiding taxes
• not paid social tax
• tax return overdue
• organization of illegal gambling

“However, the court decision contains no link to the Article 203-2 of the Criminal Code of Ukraine (illegal activity to organize or conduct gambling or lotteries),” admitted SEO CORE representatives in the commentary for AIN.UA.

“The Migration Service of Ukraine and an inspector of the State Labor Agency were also involved in the search, so they checked if the workers were registered properly. It could disappoint someone, but they found no unregistered Turkish or other foreign citizens in the office. All employees have required documents and work in Ukraine absolutely legally,” added in the company.

Damage done

After searching SEO CORE, the officers seized 120 units of computer hardware. According to the company workers, the officers also seized servers, laptops and cellphones, and even personal funds of employees that the officers found in the office.

The management believes that the cause of that search was the license issued for SEO CORE on August 25.

“We have been developing software for the gambling industry for several years. For all our clients, we provide this very service. It can also include client staff assistance if technical issues arise. Before gambling legalization, there was no special regulation in Ukraine; that is why there were many different opinions about what online gambling is and how to separate software development from it. Of course, there were many misunderstandings in communication with authorities,” the company commented.

“Now there is a new law in Ukraine, so we have got all the documents and applied by the UGLC for a gambling software developer license (literally, a license for conducting actions in the area of gambling service providing). And today, you can see the result.”

What casino was that

Based on the photo published by the SFS, it was BetTilt. It is an online casino working in Australia, Canada, Finland, Germany, India, Japan, Norway, and Turkey. It is not working in Ukraine.

Probably, it was BetTilt which software was developed and supported by the IT company from Kyiv that was searched recently by the Ukrainian police officers. According to their annual revenue of $30 million, it is a legal small-sized company doing business in the area of online casinos.

The Gamingtec representatives did not confirm if BetTilt is their client.

What SSU says

According to the SSU, one of the former premises of Vinnytsiaoblenergo JSC allegedly mined cryptocurrency. According to the agency, almost 5,000 computer equipment pieces have been used on the farm. According to the preliminary report, the loss could have been between 5 and 7 million hryvnias a month.

Citizens of Kyiv and Vinnytsia created the farm, said the SSU. They used one of the former warehouses of Vinnytsiaoblenergo, located at the industrial site of the JSC, and illegally consumed electric energy from its networks. During the raid, 3,800 game consoles and over 500 video cards were taken from the premises.

You can see in official SBU pictures that the main ‘mining’ tools were PlayStation 4 Slim consoles. Indeed, you can mine the cryptocurrency with them, but it would make no profit. Better would be to use them for farming game resources and developing game characters.

What MMI Engineering says

Lawyers representing the Ukrainian company ММІ Engineering, which, as it turned out, was the subject of the SSU release, contacted the editorial board of AIN.UA. The company develops software, maintains networks, and trains AI. Maksym Boiko, a lawyer at Juscutum, who represents the company, noted that SSU officers provided untruthful information in the release, for example:

• The claim of the agency that the company’s activities were illegal and that it was taking energy from the city’s networks, and it could have left the citizens without light in their houses. According to the lawyers, ММІ Engineering concluded contracts with Vinnytsiaoblenergo and Enera Vinnytsia LLC for the energy supply; it pays the bills according to the contractual price stated in those bills. According to AIN.UA, agreements between such parties do really exist. But we could not get familiar with their text in detail.
• The company also has a lease agreement for premises at 6A Energetychna Street, where the search took place. This is the former premises of Vinnytsiaoblenergo, which is now owned by Alfa Energy (AIN.UA reviewed the real estate lease agreement).

Update as of July 16, 2021: At the request of AIN.UA, the company provided energy bills for Vinnytsiaoblenergo and Enera Vinnytsia, LLC (one company acts as a supplier of energy, the second – as the operator of the distribution system).

As MMI Engineering said, the calculation takes place according to the scheme: advance payment + at the beginning of the next month for the previous month. For example, for June 2021 the company paid Vinnytsaoblenergo (for distribution) 122,034.43 UAH, Vinnytsaoblenergo (for reactive power) 2,695.46 UAH, Enera Vinnytsa – 186,878.16 UAH. The total amount for the month including VAT: 311,608.05 UAH.

As AIN.UA learned, the search was conducted in connection with an investigation against officials of the Alpha Energy company: SSU officers suspected them of illegal mining. The ММІ Engineering company is not mentioned in the orders. MMI Engineering did not comment on what activity was run in the premises where the search took place and how was the seized equipment involved. The editor of AIN.UA awaits more details on this issue.

Vinnitsaoblenergo itself officially stated that no mining farms had ever functioned in these premises. And that the company’s specialists did not find any traces of illegal power extraction during the search:

“The specialists of our company together with representatives of the Department of the State Energy Inspection in the Vinnytsia region were involved as experts. During the inspection, representatives of the supervisory body did not reveal a single fact of electric energy theft. Therefore, information about multi-million electricity thefts does not correspond to reality,” said Vinnytsiaoblenergo.

Consequences of the search

MMI Engineering says that the search completely paralyzed its operations, that the seized equipment is worth about 30 million hryvnias, and that the company is trying to get it back. The search also caused problems with foreign investors – they doubt further investments and don’t want to risk (according to the state registers, the owner of ММІ Engineering is ZAFAR TECHNOLOGY from the UAE).

After the search, the premises look like this:

The company’s lawyers filed complaints about the illegal actions of the SSU to the Kyiv Pecherskyi District Court and the Prosecutor General’s Office of Ukraine.

AIN.UA will follow the progress of the situation.

According According to Bloomberg, these gift codes were often sold on reseller markets at a lower price. This reselling phenomenon can be traced to Volodymyr Kvashuk, a Ukrainian who lived in the US and, being a Microsoft employee, had unlimited access to the generation of such codes.

Testing of the payment system did find glitches

Volodymyr Kvashuk moved to the United States and got a job at Microsoft in 2017. Among his job duties was to test the payments system in the company’s stores. He “bought” a Dell laptop on the website, paid for it with a faux credit card, and documented errors. The system made the purchase and sent notifications, but the money was not debited, and the order was not shipped. After all, all these actions were only necessary to test the system.

In the winter of 2017, Kvashuk found that unlike buying physical products, every time he checked gift card purchases, the Microsoft Store sent real gift codes. The money was still not deducted, and the tester could generate an almost unlimited number of cards.

He realized that his team’s experimental accounts were programmed only to prevent them from sending fake purchases of physical goods such as PCs, tablets, keyboards, etc. Microsoft simply didn’t plan for its digital retail testers to order Xbox gift cards on the job. Kvashuk could have reported the vulnerability to his management, but instead, he started reselling them.

Underground business affecting global prices for the gift cards

Kvashuk started small, generating Xbox cards in increments from $10 to $100. But by the time federal agents arrested him almost two years later, he had stolen more than 152,000 Xbox gift cards, worth $10.1 million, and was living off the proceeds in a lakefront home with plans to buy a ski chalet, yacht, and seaplane.

In January 2018, Kvashuk built a computer program, PurchaseFlow.CS, to sell a really large number of gift cards. With a few clicks in the app, he could select a gift card denomination (30, 75, 100), the currency output (USD, EUR, GBP), and the desired number of purchases. Prosecutors later said the program was “created for one purpose, and one purpose only: to automate embezzlement and allow fraud and theft on a massive scale.”

At one point, Kvashuk reached such volumes that prosecutors said it began to influence global price fluctuations for Xbox gift cards on reseller markets. When prices dropped too low because of an oversupply of codes on the market, he would stop in the hope the lack of product would push the market upward.

Kvashuk bought a red Tesla Model S for $162,899 and then a modern house for $1.675 million. He explained his expenses are disproportionate to the income he earned by investing in cryptocurrencies.

Microsoft knew about the scam but couldn’t figure out the scammer

Kvashuk was very careful. Usually, he and his colleagues switched between a couple of fake profiles that they registered in the Microsoft store. To conceal his identity, Kvashuk figured out his colleagues’ passwords and used their test logins. Also, he masked his Internet traffic by routing it through servers in Japan and Russia.

But in February 2018, Microsoft’s Fraud Investigation Strike Team noticed an unexplained spike in online purchases using gift card codes that was about double normal redemption levels. Investigators assumed that the hack came from an “external bad actor” but soon realized that it was an inside job.

In March, corporate investigators traced the irregular activity to two internal test accounts assigned to Microsoft sales employees. The accounts, they learned, had already gobbled up almost $8 million in codes that were selling on the reseller markets.

Investigators questioned the employees behind those test accounts, who seemed like stunned victims, not perps. Microsoft determined that a testing program called Fiddler, which employees used to file bug reports, contained data divulging tester logins. Anyone with Fiddler access could have hacked the accounts.

The company soon discovered that one of Kvashuk’s accounts had bought three Nvidia graphics cards that had been shipped to a non-existent address. When asked whether he used the test accounts to generate codes, Kvashuk admitted to redeeming about 600 of them, but only for buying movies from the Microsoft store. Four weeks later, Microsoft fired Kvashuk.

FBI, searches, and jail

For a seemingly sophisticated engineer, Kvashuk had made many mistakes. Although he cloaked his address through international servers, he used the same Linux-based computer with the same outdated version of the Firefox browser to commit the theft. In addition, the Microsoft Office license he bought at the start of his scam was registered to an administrative account for SearchDom, his startup. This circumstantial evidence allowed Microsoft to link him to the crime.

Soon, federal agents, who had conducted their own investigation into Kvashuk after Microsoft referred the case to them, searched his home and found a lot of incriminating evidence, such as crypto wallet keys, notebooks with bank account information, USB drives stuffed with stolen codes, and lots of cash.

The agents also found a list of Kvashuk’s future investments. The list was written in Ukrainian and was titled: “How I will manage my next 10 million.”

In February 2020, federal prosecutors from the Western District of Washington brought Kvashuk to trial for money laundering, identity theft, mail fraud, and filing false tax returns.

Kvashuk’s attorneys argued that their client did not intend to defraud anyone. He generated the gift card codes to help the company because the more free gifts Xbox gave away, the more popular the platform would be, which would increase overall costs.

The judge and jury found his defense ridiculous and declared him guilty on all counts. He’s likely to be deported back to Ukraine after serving time in prison until March 2027 and will have to pay back $8.3 million.

The round was led by LVL1 Group, with participation from AddVenture, TA Ventures, Vladimir Kholiaznikov, and angel investors Oskar Hartmann, Alexander Nevinskiy, and Dominique Locher.

Jiffy will use this investment to launch its first stores in London this month. Also, it plans to make the service available in Westminster, Waterloo, Lambeth, Battersea, Clapham Town, Shoreditch, Bethnal Green, Hackney, Whitechapel, Stepney Green, and Leytonstone.

“Our goal is to make it as accessible as possible for a very wide audience: from busy parents juggling work, raising children, and an active social life to busy professionals in urban areas for whom saving time on essential shopping means they are free to use it for activities they really enjoy,” says Artur Shamalov, Jiffy founder.

About Jiffy

According to the company’s LinkedIn page, Jiffy is an online supermarket with an ultrafast delivery service founded in 2020 and based in London. Jiffy’s mission is to transform customers’ online grocery-shopping experience to make it faster and more convenient to get the products they need when they need them. Its on-demand delivery service offers a wide selection of fresh produce and household essentials sourced from popular brands and local suppliers at retail prices. The company uses a network of smart fulfillment centers, known as cloud stores, which are dedicated to serving the needs and are tailored to the tastes of local communities.

Previously, Everad was also accused of selling uncertified dietary supplements which were allegedly effective against coronavirus. Back then, the Security Service of Ukraine searched its Kyiv office and found over $1m in cash there. The company denies everything. Commenting to AIN.UA, a company’s representative has claimed that Everad did not sell anything in Ukraine and also declared the falsity of the information about the money found during the search.

AIN.UA journalist gives a summary of the Recorder article. She has talked to a representative and an ex-employee of Everad. She has also registered on the company’s web platform as a partner to find out how it works and reconfirm Recorder’s findings.

In a nutshell

• In Romania, it has been noticed that dietary supplements which can allegedly replace medicines are gaining growing popularity. They do not work – those are pills with no active ingredients. The problem is that they are promoted as substitutes for medications. 
• The mixtures have been marketed on the Internet via fake websites of the local Ministry of Health, using photos of doctors and celebrities without their consent, which act as guarantors of such “treatment.” Entire call centers work on cold calls (the operators themselves allegedly do not know what they are selling).
• According to Recorder, Ukraine’s Everad is among the most active sellers of these supplements on the market. The company has been selling nutritional supplements through a partner network across over 20 countries overall. Meanwhile, Everad claims that none of the websites or products mentioned in the article are related to the company and that Everad itself does not violate the laws of individual countries.
• Everad’s revenues in 2019 are over $16.5m.
• This activity is illegal: the mixtures are not certified, the advertising misleads people, and fake information is used. The Romanian Institute for Food Bioresources confirmed this to the Recorder journalists.
• A former employee of Everad confirms what was said in the Recorder article. The journalist of AIN.UA has also conducted an investigation of her own to check the information presented by Recorder.

In-depth story

• The orchestrated network has set up a scheme to sell fake nutritional supplements to aged people. To attract customers, it uses misleading online advertising, which urges the audience to refuse their professional treatment and switch to the proposed alternative. As suggested by the advertisement, it can “cure” various diseases, including hypertension, prostatitis, varicose veins, psoriasis, diabetes, as well as stop alcohol addiction.
• For better plausibility, the scammers have used various methods: for example, they have cloned the website of the Ministry of Health and, to support the quality of the product, they have stolen identities of doctors (and not only those), who “share their observations.” To protect themselves from call tracking, participants in the scheme use various specialized services.
• After receiving an application from a trusting elderly person to purchase a “healing” product, the call center employees contact and urge him or her that this is the right decision. However, when trying to learn more about the products, the operators become aggressive.
• It is noteworthy that buyers can find ads about selling fake pills on very different media resources, which place banners and other ads for monetization.

• An entire industry that works on an international level stands behind this story is. There are hundreds of duplicated Internet pages in several languages identical to those operating in Romania. A former Everad employee has also confirmed this information in a commentary to AIN.UA.
• The names of products are constantly changing as scammers “invent” new drugs. When certain products are no longer favored in one country or are the subject of unfavorable articles in the press, the network replaces them with others.

• The products offered by the scammers are becoming popular and in demand. In the last month, the “cure” for hypertension, Detonic, was searched for over 15,000 times on Google, and the “cure” for prostatitis, Urotrin – over 30,000 times. And these figures are only for Romania.
• The Recorder journalist managed to reach a woman who worked in the call center and urged clients to buy fake pills to replace the treatment prescribed by doctors. She confirmed that the scheme was run from Ukraine.
• According to her, none of the workers know the composition of the pills. The employees work unofficially, on a salary of up to $400 a month.

Who stands behind this story

The pills are produced in Russia by companies that are publicly engaged in this type of activity. They pack herbal powders in plastic containers, which are packaged and labeled on demand.

“Over the past five years, we have developed and produced over 1,000 products for affiliate marketing programs,” states Moscow-based Capital Produkt. Their offering includes “creating the idea and name of the product, creating a unique design, preparing documents, creating the product.

• During the investigation, the magazine found two companies that are long-term players in the Romanian market: LeadBit (Russia) and Everad (Ukraine). During the existence of the scheme, they managed to create a huge network of virtual sellers that sell illicit products in dozens of countries.

Leadbit focuses on the sale of dietary supplements positioned as “miracle-working drugs.” In three years of existence, the company has expanded its network from the Baltic States and Europe to Colombia and Vietnam. Leadbit call centers operate in 50 countries globally. At the same time, the founders regularly share photos of their luxurious life on the social network.

In Romania, one of the two most active advertisers of these drugs is MGID, an AdTech company with an office in Kyiv and a total reach of 850 million people. Recorder reports that MGID works directly with Everad and Leadbit to spread the word about the pills. It is noteworthy that in February 2020, MGID’s Ukrainian office was searched – the company was accused of “financing of criminal websites.” MGID called the search groundless.

Everad’s trail

• In Romania, Everad operates through Make Profit SRL. The journalists of Recorder discovered that it was founded back in 2016 by a Ukrainian Roman Drozdov. Later, another Ukrainian, Igor Parinov, became the administrator of the company. According to their LinkedIn profiles, they both worked for Everad long before starting Make Profit SRL in Romania. It justifies the relationship between Make Profit SRL and Everad since the company was founded in Romania.
• Subsequently, the company was handed over to a Ukrainian Vitaly Stavnitsky, whose legal address is registered in Moscow. However, Make Profit SRL retained its business and currently sells Everad food supplements in Romania.
• Besides, Make Profit SRL is listed in the customs invoices as the recipient of nutra from CITY TRADE UKRAINE LLC, which is indicated as a company controlled by Everad in the court’s search warrant. Yet another proof of the ties between Make Profit SRL and Everad. Simultaneously, the latter is a supplier of uncertified supplements, not just an advertising company.
• The company sells nutritional supplements in more than 20 countries using a partner network, also engaged in cloning websites. In doing so, Everad asserts that call centers take over the orders and handle the delivery of products, while the subsidiaries’ only task is to promote supplements. In addition to generous commissions, there are also additional prizes offered to best-performing branches.
• The fact that Everad not only advertises the products can also be evidenced by the information on the website of the Russian company Sashera-Med, which, in particular, is engaged in the sale of the so-called nutra. The official distributor of Sashera-Med products mentioned on the company’s website is PromoArt LLC (Vostok LLC)—the partner network of Everad.
• Interestingly enough, Everad’s turnover has soared in recent years: from $208,000 in 2017 to $4.2 million in 2018. Its revenue has reached $16.5M in 2019, according to the latest tax information available from the Ministry of Finance.

We were able to contact a former employee of the company, who confirmed the functioning of the large-scale scheme:

What is described in the article is accurate. I don’t know who is the ultimate beneficiary in the company – I have never seen them, but call centers and sales exist both in Ukraine and in more than 20 countries worldwide. There was a production in Ukraine, but it seems to have been closed long ago. Production is established in Russia, Asia, and countries with cheap raw materials (at least it was in 2019).

Dietary supplements with an “empty” composition are indeed presented as effective cures for many major diseases. Information is presented to employees differently. They say these are auxiliary medicines, and we do not sell health. Doctors, reviews – all fake, same landing page is duplicated in different languages and tweaked to meet a particular country’s needs.

I don’t know the specifics of sales and affiliation, but there are many sketchy schemes and deceptions both inside and outside the company. It seems that there were also massive non-payments to partners. My experience of working with the company is as negative as they come.

In response to a request from the editors of AIN.UA, representatives of Everad called the investigation of Recorder a puff piece, adding that Everad does not violate the laws of individual countries and the internal rules of the advertising network. 

All product examples and advertising violations are in no way connected with the products promoted by Everad’s advertising network. The entire “investigation” shows the activities of competitors.

All mentions of Everad in the article are reduced to only one sentence: “Ukrainians in Everad are at least at one level,” without a single mention of violations in the company’s activities.

Everad follows a strict pre-moderation policy of advertising materials that affiliates plan to publish and never violates individual countries’ laws and the advertising network’s internal rules.

The article is clearly planted. None of the websites and products mentioned in the article are related to Everad. We do not display such advertisements in the territory of Romania.

Look from inside: Everad partner network

The journalist of AIN.UA conducted her check of the Recorder article, following the steps of the Romanian journalists. The journalist of the magazine has registered as a partner on the Everad platform and tells how you can sell supplements in Romania (and not only) through it.

To start promoting supplements, all you have to do is to select specific supplements and request access to offers from the administrator. The application requires you to talk about your experience in Internet marketing, as well as clarify the traffic sources that will be used in the sale of dietary supplements.

Having gained access to the Everad system, the partner can choose the landing pages through which the supplements will be sold. Websites from the list are available in different languages, as well as in several variations. Moreover, the seller was asked to select a transit page (in particular, a fake website of the Ministry of Health of the target country), from which the buyer can go to the checkout page.

Each transit page contains ostensibly real customer reviews, as well as “doctors’ recommendations.”
AIN.UA journalist found photos of some of these “doctors” and “buyers” on stock photo services, and Dr. Ionescu Octavian, who recommends Friokard, turned out to be a prominent TV presenter and journalist Vladimir Posner. On another landing page, Posner tells how DiabeNot capsules helped “lower blood sugar.”

In the account, a partner can monitor the statistics of orders for placed supplements, filter indicators by country, landing page, platforms, and other promotion channels. The “Finance” section contains information about current earnings – the partner receives a commission every time a buyer places and pays for an order.

Thus, the sellers’ task is to receive offers for supplements and place as many selling pages on the Internet as possible. The rest is handled by Everad: the call center reaches customers, the delivery is arranged, and the products are shipped.

In the account, partners receive information about offers suspended in many countries. As noted by the Recorder, this could be due to a lack of demand for the supplement or if the supplement becomes the subject of negative press coverage. In this case, sellers are offered to replace the product with a similar one but with a different name.

New versions of landing pages and transit pages are regularly added to the platform, and partners are also informed about this in the “News” section.

The list of countries where supplements can be sold does not include Ukraine. Regarding the Romanian market, all the supplements listed in the Recorder material are sold in more than ten countries.

Why it matters

The Ukrainian company Everad is accused of illegally selling dietary supplements in different European countries. An active advertising campaign with fake recommendations from fake doctors and customers is used to distribute the drugs. The customers are offered to refuse professional treatment, which can have a negative impact on health. All of this is actively promoted by companies with a reach of 850 million people, as MGID did.

Considering that anyone can join Everad and LeadBit as a partner and sell pills online – the scam’s reach could be enormous. And the precedent could reflect on the whole Ukrainian AdTech industry: the above Everad and MGID are, after all, different types of companies. Full-service companies “producer – traffic – call center” and simple traffic providers (like members of Affhub community of marketers supported by Everad) are not the same. But if the story continues, European countries are not likely to deal with it.

The report of the Bureau and the Prosecutor General’s Office says that the ex-Head of the bank’s Board, the Former First Deputy Chairman of the Board, and the Former Head of the Financial Monitoring Department are among the suspects.

“The investigation concluded that in December 2016, the day before PrivatBank was declared insolvent, the suspects, using false documents, transferred more than UAH 136.89 million in favor of an insurance company related to PrivatBank’s ultimate beneficiaries,” stays in the Bureau’s statement.

Neither the Prosecutor General’s Office nor NABU names the former heads of the bank. Given the fact that they both are referring to persons, who held these positions the day before the nationalization of the bank, it could be Alexander Dubilet, Elena Bychikhina, and Vladimir Yatsenko.

Some media have already published the names of the suspects. Several sources have also confirmed the above-mentioned names to AIN.UA.

There is also a photo and video of the moment of reporting the suspicion to one of the ex-Heads of the bank on the NABU Telegram channel. Presumably, it is Vladimir Yatsenko. At the request of AIN.UA, NABU refused to clarify the names of the persons who were declared suspect but confirmed that they held those positions before the nationalization of the bank.

“In accordance with Part 4 of Art. 296 of the Civil Code of Ukraine, the name of an individual who is detained, suspected or charged with a criminal offense, or the person who has committed an administrative offense, can be used (made public) only in the case when the conviction of the court enters into force or a decision in the case of an administrative offense is issued,” the Bureau replied.

Yatsenko and Dubilet are also co-founders of Fintech Band, the developer of the popular mobile bank monobank and Koto (was launched in the UK). Until February 23, they were also the beneficial owners of the company and had 33.74% and 17.18% of shares accordingly. 

AIN.UA sent a request to the Fintech Band for information about how the situation could affect the company’s work but did not receive any comments at the time of the article’s release.

The company admits there have been delays. Kwambio has not been working since March, but the management hopes to raise a new round of investment, relaunch the production, and pay off debts.

AIN.UA’s editor has spoken with former and current Kwambio employees, as well as the new management of the company, to investigate what is happening in the startup.

A brief history of Kwambio

The startup was launched in 2014, at the height of the 3D printing technology hype. 3D printing came into fashion all across the world, but for basic users, the preparation of printing models was complicated and obscure. Kwambio offered ready-made models that could be selected on the website and ordered as printed items. There were toys, home décor, and other products among them.

With this model, the startup came to IDCEE and won EUR 15,000 for the first place, as well as attracted a $500,000 investment from an unnamed Odesa-based company.

In 2015, Kwambio presented its own 3D printer, and in 2016, its own innovative 3D printing laboratory that was used for printing with ceramics and metal. After that, the company made it to TechStars Boston and received $650,000 for the startup’s development from the accelerator and business angels.

In October 2017, Kwambio raised another investment, receiving a further $500,000 from the VC firms Empire State Capital Partners and Impulse VC. By that time, Kwambio had already had a working 3D printer of its own design, with high printing speed and fidelity. The team was planning to put the device into serial production and sell it for $25,000 per unit.

In 2018, the startup entered a new Techstars program, which helped it get another $20,000 in exchange for 6% of the company, as well as receive a convertible loan of $100,000.

In 2019, Kwambio announced a new project, ADAM, looking at printing implantable human bones. The project attracted seed financing from WeFund, but the amount was not made public. Kwambio itself was also one of the project’s investors.

Thus, in the course of its existence (6 years in total), Kwambio has received about $1.69m in grant financing and public rounds, not including the convertible loan.

The startup also planned to raise a new financing round in late 2019 or early 2020 to expand ADAM and complete the development of Kwambio printers.

Who is behind Kwambio

Kwambio was founded by the Odesa resident Volodymyr Usov who ran the company from its inception till 2019. In January 2020, he won the contest for the Head of the State Space Agency of Ukraine (SSAU) and went out of the Kwambio business. According to Usov, he has not been involved with Kwambio or ADAM for almost a year.

As of today, the former Head of Development, Dmytro Skomorokhov, acts as the CEO of both projects.

Another active contributor to the two projects is one of the investors, Alex David Bart, from New York, the founder and managing partner of the Empire State Capital Partners fund that invested in Kwambio back in 2017. The fund has two offices, in Kyiv and New York, and does not have any portfolio companies yet, except for Kwambio.

Today, Bart holds the position of Non-Executive Director at Kwambio. He is helping Skomorokhov to attract a new round of investment to relaunch the startup.

When the problems began

According to one of the first employees who spoke to AIN.UA’s editor on condition of anonymity, Kwambio has always had financial problems, despite the interest from many investors.

Serhiy (not his real name) worked in the company since 2014 till 2017. As Serhiy explains, he and his colleagues were understanding about the delays, which often happen in startups. They were putting their heart into their work, having access to the most innovative 3D lab in Ukraine.

But the problems with funding were just getting worse.

At the time of Serhiy’s departure, the company had about 15 employees, and from what he knows, eventually there were no one left from the original Kwambio team. He has not worked with Kwambio ever since.

It is worth noting that Serhiy left the startup in spring 2017, and in the fall, Kwambio raised a new round of investment. Alex Bart, who joined the project during that round, is unaware of the wage problems in the early Kwambio history but admits that there might have been delays. It is all about the specifics of the startup’s operations.

“It could happen that it ran out of money while new investments had not been received in the account yet. That was why they could delay payments or pay in part,” he explains to AIN.UA’s editor.

That being said, according to Serhiy, the company did not settle up with him in the end. As well as with his colleagues who left at about the same time.

Debts, cash-outs, lawsuits

According to employees who joined Kwambio in 2017, everything went well in the startup until around mid-2019. No payroll disruptions, active leadership that had earned a strong credit of trust with the team, and an inspiring product. However, at the end of 2019, the problems resumed.

Svitlana (not her real name) worked in the company from the fall of 2017 till late 2019. In her words, during that entire period, even if delays happened, that was for a couple of weeks at most, and then the company would clear all arrears to the employees. But in August of 2019, the situation worsened.

First, according to her, payments were simply being delayed, but then they stopped altogether. After her departure, Svitlana did not receive the full payment, so she decided to go to court.

All the while, according to her, the company was run by Andriy Rozov, the former CFO of Kwambio. In the meantime, Dmytro Skomorokhov stayed in the US, dealing with the American branch of the company (Kwamb.io Inc. is registered in the USA, and it also has a Ukrainian subsidiary, Kwambio LLC).

“I respected the company management, namely Volodymyr Usov, and so, was getting by with just promises to pay me for several months, but then, to my deepest regret, I saw that taking legal action was the only way out,” she explained. “Following which, I received threats saying that if I filed a suit, they would drag the trial out and make my life a misery.”

Along with Svitlana, another Kwambio staff member, Petro (not his real name), who was holding a leading position, tried to stand up for his rights. Since October 2019, his paychecks were being delayed, and he was receiving half the amount at the maximum. In January 2020, payments stopped completely. At meetings, the staff was informed about future layoffs, but up to the quarantine, people kept working without pay.

This is confirmed by Anton (not his real name). He worked in the company for about a year and kept going to work through to March, despite the wage delays, until the company processes stopped completely. As of today, Kwambio owes him three months’ wages.

“When Usov left, we already had financial problems, surviving on the remains of investments. Printing was unprofitable, the printers were not yet put on the market. But we still went to work. We stopped coming when we ran out of consumables and there was nothing left to work with,” Anton says.

According to him, the printer that Kwambio had been preparing to bring to the market was at its final stage of development. To iron out the kinks and begin sales the team needed three or at most six months. But the investments ran out, and there was no money for that.

“Several months after the delay, I wrote quite an extensive discontented message to the general chat room, after which Rozov offered to talk on the phone and explain the situation first-hand,” Petro recounts.

“On the call, I was told that the money had been coming in not straight from the investors, but through some cash-out shell companies, and the cash-outers had allegedly stolen the money,” says Petro. AIN.UA has a record of this conversation.

When half a year had passed since the arrears, Petro teamed up with Svitlana and filed a pre-trial application. Meanwhile, other Kwambio employees were paid part of their wage arrears. Petro asserts that those payments to his colleagues were made on the condition that they would resign voluntarily. In lieu of the remaining debt repayment, they received a debt warrant from the American company, which is not legally binding in Ukraine.

Petro did not get any payments himself.

“I asked why so, and they told me it was 100% certain that I, in particular, would receive no money because I had decided to defend my rights. And that I had been fired without notice. Naturally, it had been done in circumvention of the legitimate process, not to mention paying off the debt,” he says.

Petro’s case never made it to court: he did not want to spend his time and money on litigation. Svitlana is keeping up the fight, even though in September the Odesa court dismissed her claim due to insufficient evidence.

Outer space. Searches. Relocation

In November 2019, Kwambio’s founder, Volodymyr Usov, applied for the position of the Head of the State Space Agency of Ukraine (SSAU). He was the youngest candidate.

“There was a lot of negative publicity: the old guard was very much indignant about this (Usov’s win in the competition – Ed.),” Alex Bart recalls.

The competition included several stages; Usov reached the final with strong chances of winning.

About the same period, a search was conducted over a corruption case involving a company created by Usov back in 2011, the digital publisher Gutenbergz.

For reference. According to the case file, Mykolaiv officials bought from Gutenbergz through Electronic Solutions (a distributing company then owned by Skomorokhov, who would later sell it) software for accessing the e-learning system, for a total of UAH 15m. In parallel, the MES decided to distribute textbooks free of charge via its website, which did not result in the termination of the contract: the budgetary funding was assimilated. In light of this, the investigators got court orders to search not only Gutenbergz, but other Usov’s companies too, including Kwambio and ADAM.

The search warrant was issued on December 17, 2019, just on the day before Usov’s final interview for the position of the SSAU Head.

“This cannot be a coincidence,” the current Head of the SSAU thinks. “Now the case is stagnant: the search was ruled illegal, and we are gradually receiving judgments on the return of everything that was seized.”

According to Usov, the searches were not particularly damaging for Kwambio – it was Gutenbergz that suffered the most: operatives blocked the company’s activities. But the employees hold a different view. Petro claims that due to the searches in Gutenbergz, in January 2020, the Kwambio team was refused to rent the premises.

“The landlord didn’t like that searches were underway in relation to Mr. Usov’s other startup, Gutenbergz. The property was moved to other premises of the company, where, nevertheless, there were no conditions for manufacturing,” he says.

For his part, Dmytro Skomorokhov claims that Kwambio gave up the premises of its own accord. “We had two premises; we dropped one because of the high rent and moved all the equipment to our R&D office, but there were no working conditions there, and it was just waiting for the time when we would relaunch,” he explains.

Why Kwambio ran out of money

According to Usov and some of the employees, Kwambio’s situation worsened because of the strict quarantine in China. This was the first blow.

“We purchase components and consumables in China, and after they blocked everything there and the supplies were halted, our manufacturing cycle immediately increased – and it was just the time when we were launching the second version of the printer,” Usov says.

According to him, Kwambio was planning to raise a short round of investment in spring 2020. But due to the pandemic and the resulting uncertainty, the company was unable to close it in time, so the wage payment interruptions resumed. As Skomorokhov specifies, the sum in question was $300,000.

“This would be sufficient for us to grow further and do everything that we had not finished. But in March, we received a letter from the investors, saying they were putting everything on hold. In 2 or 3 months, we tried to resume negotiations, but during COVID no one dared to invest,” he says.

Another blow to Kwambio was the quarantine and disturbances in New York, which were literally paralyzing the city since the spring of 2020. New York is the place where Kwambio’s product distribution office is located.

“All our turnover was coming from the US, and we couldn’t keep a full complement on the payroll, because New York plunged into a deep crisis, and we simply had no working capital,” Bart explains.

“Since our product is not an essential commodity, it is targeted at designers and IT, demand dropped quite badly,” Usov confirms.

Dmytro and Alex tried to apply for anti-crisis support from the American authorities but were refused, because the employees whose wages Kwambio was going to pay with that money, were located in Ukraine, not in the US. In Ukraine, there was no business support program in place.

“The investment money has run out. The new round has failed. The sales have stopped. There was no support from anyone. Therefore, we had to stop all processes,” Skomorokhov summarizes.

As Bart explains, Kwambio had to cut the workforce from 25 to 10 people, some of whom were transferred to ADAM.

UPD: On November 23, after the publication of the piece in Russian, Kate Kolambet, who worked at Kwambio from 2014 to 2020 as a marketer and PR manager, contacted the editorial team. She stated that the collapse in New York could not have caused the closure of the company.

“I was the only employee of the company in the New York office, and I can confidently state that no distribution of goods has ever taken place in this office. This office was a small room at co-corking space where potential customers could come to see models and ask questions. I held 2-5 meetings per month from its inception until February 2020, when I stopped working for Kwambio because the company didn’t pay me my salary for seven months, and the guys didn’t even think it was necessary to get in touch and talk openly about repaying the debt, they just changed the password on my work email. So the riots in New York or the crisis caused by the pandemic are not the same reasons why Kwambio was paralyzed.”

Kwambio 2.0. Will the startup come out of the tailspin?

Kwambio has just resumed the investment negotiations now. Bart says, they are in their final stage. Besides, according to Skomorokhov, one of Kwambio’s investors has agreed to allocate a small sum just to start the printing process.

“On launching the service, we will get at least some cash flow to invest in the most pressing needs of the company. On launching the service, we will be able to seek the investments that we couldn’t obtain during the lockdown,” Skomorokhov explains.

“Now, with people accustomed to the quarantine, investors understand that COVID is not going to end soon, but one still needs to work and live. If we show that we have survived and we work, we have demand and sales, then our business will be eligible for investment.”

In September 2020, the company moved to a new location and is preparing to relaunch its printing lab in the IT hub at 93 Kanatna str., Odesa. The premises were provided to the startup free of charge for the first three months. It is currently under repair, but according to Skomorokhov, the team hopes that in December it will be possible to move in and start printing.

“We will feel our way and see how our business goes in a post-COVID era, whether there will be orders or not. We have many clients waiting for us to launch, but we cannot know, how they themselves will be doing in the future and whether they will be able to purchase our service,” Dmytro explains.

“We do everything to start working, albeit with a reduced team, to return to what we had (before the crisis – Ed.), and maybe do even better.”

Kwambio still has pre-orders for printers with 10% advance payments. Skomorokhov says, there were about 15 pre-orders for the smaller printer costing $7,000 and about 10 for the bigger one at $45,000. According to him, the demand was greater, but the startuppers decided not to take too much pre-orders, because after shippings to the first clients, additional issues might arise, which would require more polishing.

Skomorokhov has also revealed plans to franchise Kwambio so that entrepreneurs could open its partner offices in different countries for a royalty. Kwambio’s main customers are in the USA, but the company has received service requests from across the world, for example from Dubai, the UK, Italy, and Singapore. The franchising program should come as a response to those.

Furthermore, progress is being made towards obtaining licences for ADAM in the US. If ADAM shows traction in the next two months, the plan is to extend the startup team.

What about the debts?

Alex Bart claims the company does not give up its obligations and intends to pay off its debts to everyone. He says he has already discussed this in person with 5 or 6 employees.

“Recently, we have paid part of the arrears, first to the current employees,” says Bart.

Kseniya Shokhet, who left Kwambio in February 2020, confirms that she has no complaints against the company.

“There are no arrears on my wages. As for the imminent closure of the company, the rumors seem implausible. Not long ago, I was asked to provide advice for a new marketing department member. Social networks have begun to revive. Longtime staffers call me from time to time to clarify something. Life is going on actively, as far as I can judge. From a distance, of course,” she told AIN.UA in her commentary.

Anton has not been contacted yet. He stays in touch with his colleagues through the work chat room and has no more expectations as for the debt repayment or his returning to Kwambio. “I have gone through all the stages from denial to acceptance. We have long been promised jam tomorrow, and there is still no progress (in paying the arrears – Ed.).”

There are people among his colleagues who still hope to come back to the much loved work. Mykola (not his real name) is one of them.

“After a long break, the company is preparing to start production at a new site in Odesa in a few weeks. The team hasn’t scattered away, except for 2 or 3 persons. The company has begun to settle up accounts, but there are still debts,” Mykola says.

Anton partly confirms the information. According to him, the work chat room has revived lately. Some employees have been hired again. It mainly concerns printing operators who were dealing with ceramic products. The employees who were developing the printer have not been hired back, and there has been nothing to hear about repayment.

To motivate employees to stay with Kwambio and ADAM during the hard times, the company intends to issue additional shares and distribute them as options.

“We will hand them over to the management and employees upon reaching the set targets. This way, we want not only to motivate people with wages but, put crudely, to help them work for themselves, being shareholders, even if only minor ones,” CEO of Kwambio explains.

The startuppers promise to pay off their debts to those who have quit as well. For this to happen, Kwambio needs to resume sales. Whether Svitlana will make the list, is unknown.

However, the AIN.UA team managed to find out what was the size of the stake acquired by Horizon Capital and how much it paid for it. The team also found out about Igor Mazepa and Concord Capital’s stake in MAKEUP.

According to AIN.UA, Horizon Capital acquired about 18% of the company. The deal amount totaled $8 million.

Horizon Capital’s stake

AIN.UA managed to find details about MAKEUP stakeholders in the Cyprus state registry. According to the extract from the register, there are 4 shareholders in the company MINRAN LIMITED (a Cypriot legal entity which, according to YouControl, owns a 99% stake in MakeUp).

DEALBETA INVESTMENTS LIMITED is among them. It is a Cyprus fund managed by EEGF III of the investment company Horizon Capital, through which it carries out its deals. As stated in the document, Dealbeta owns 257 shares of Minran (the company has issued 1,401 shares in total). Thus, Horizon Capital acquired an 18.3% stake in MAKEUP.

The editors also managed to study the financial part of the investment round, which is documented in the same Cypriot extracts from the registers. The total amount of the deal was €7,179,600 ($8 million).

Thus, currently, the total valuation of MAKEUP Group is about 39 million euros ($43.5 million).

Concorde Capital’s stake

AAnother shareholder of MAKEUP (or rather MINRAN) is DARTLEM HOLDINGS LIMITED. It is linked to Igor Mazepa, the founder of Concorde Capital (or his full namesake). Dartlem owns 28 shares, which is less than 2% of the company. Previously, in an interview with Liga.net, Mazepa said that the fund has a stake in MAKEUP, but did not specify the figures.

Founders’ Stakes

The remaining two shareholders of MINRAN are KLARIANTALE LIMITED and BELIORID LIMITED. BELIORID LIMITED is linked to the full namesake of one of the co-founders of MAKEUP, Yevgen Maliev.

According to Panama Papers data, the shareholder of KLARIANTALE LIMITED is Serhii Volobuiev, the second co-founder of MAKEUP (or his full namesake, registered at the same address in Ukraine).

Maliev controls almost 48% of the company, while Volobuiev controls just under 32%.

As all transactions were registered in offshore countries, there are no changes in the Ukrainian TOV MAKEUP registers yet, as well as in the registers of subsidiaries.

In 2020, when asked by AIN.UA about the progress of the promising startup, Sixa investors reluctantly acknowledged that the contact with the company was lost, the startup had disappeared, as well as their investments. One of the investors, speaking with undisguised anger, called the founder Mykola Minchenko “a Ukrainian Ostap Bender.”

Investors unaware of each other, products existing on paper only, and two lawsuits in the USA – this is what AIN.UA’s editor has found during her investigation of probably the most dramatic scam in the history of the Ukrainian IT entrepreneurship.

What is Sixa?

The first mention of Sixa dates back to 2015. Back then, the company offered a revolutionary [not quite so – Ed.] solution: a cloud computer.

“Effectively, Sixa is a full-fledged powerful computer in the form of an application that supports various devices and provides for the execution of the most demanding tasks,” said Kateryna Kondrunina, the then COO of the startup.

The idea behind ​​Sixa was to give users access to a powerful virtual computer that would allow them to use heavy-weight programs on old hardware. For example, VR games or environments for complex engineering calculations that were previously impossible to install or use due to hardware limitations.

“You cannot afford to buy a supercomputer for yourself, but renting it is a different story. Given the current growth of VR, which specifically requires powerful hardware, investors fell in love with the project,” says one of Sixa’s investors on the condition of anonymity.

It was this solution that brought the team to the famous American accelerator Y Combinator and helped secure a $120,000 investment from it. Sixa had attracted investments before, but it was this success in the world’s main startup accelerator that was indicative for many: Sixa became targeted by investors. Y Combinator did not respond to AIN.UA’s request.

By 2016, the Sixa cloud platform for several months had been available in beta for 15,000 developers, at the rate of $49–59 per month. And people were continuing to line up for the registration, as claimed by Sixa’s executives.

In 2017, the startup suddenly hit the media with a new product. A new wave of hype was just rising in Silicon Valley around virtual reality technologies. And Sixa introduced Rivvr, a VR helmet akin to Oculus Rift and HTC Vive – wireless and with minimal latency.

Lucas Matney, a TechCrunch journalist, praised the helmet in his review, though noting that its video transmission was unstable at times. VR fans were ecstatic about getting rid of wires. Rivvr was available for pre-orders since January 2017. The first batch consisted of 4000 devices only. Two models were available: Rivvr Lite for $200 and Rivvr Plus for $250.

A year later, in the spring of 2018, during the peak of blockchain and cryptocurrency hype, Sixa announced another spin-off: its own blockchain and ICO. This announcement helped Sixa attract several more relatively small investments from small funds and angels, according to AIN.UA’s own sources.

So, in 2018, Sixa was working on three products: a cloud-based supercomputer in beta, a helmet on pre-order, and a blockchain in development. Sixa had more than $4 million in investments from Ukraine, Russia, and Silicon Valley. Its largest rounds were:

• $3.5 million from Tandem,
• $500,000 from u.ventures,
• $400,000 from Digital Future,
• $300,000 from TMT.

Investors were set up for success and were doing everything possible to strengthen the asset. As they themselves claim, at first the project sent all reports on time and was always available for communication.

Virtual vs actual reality

Then the reports began being badly delayed, and the startup’s main person, its co-founder and CEO, Mykola Minchenko, disappeared for long spells of time and would not answer letters and calls.

One of the investors remarks that he used every available means to get access to the product, but was turned down by Minchenko, who claimed access was granted on a first-come-first-served basis, and the enquirer was at the back of the line.

Another investor, having scoured Facebook and LinkedIn, concluded that Sixa had no employees, although Minchenko claimed that the startup had about 20 developers in Odesa, plus employees in the US and Asia.

Then suddenly, Tandem Capital, Sixa’s largest investor, withdrew half of its $3.5 million investment.

“Addressing investors’ concerns about the reasons for the withdrawal of the $1.7 million investment by Tandem, the lead investor of the round, Minchenko said that the Chinese corporation HTC [producing HTC Vive VR helmets, among other things – Ed.] had expressed interest in buying Sixa. And despite everything was clearly going wrong, this answer satisfied everyone,” says one of the investors. “He simply blew away the current and potential investors, who were already calculating in their minds the multipliers of the next rounds instead of conducting due diligence and auditing.”

As an example, an investment of $300,000 from TMT Investments in 2019 was estimated at $900,000.

Each time, Minchenko showed investors just a demo of the product, and from his computer only, flaunting non-existent agreements with industry giants: now Intel wanted to buy Sixa, then HTC wanted to license Rivvr; ASUS and HP were also mentioned. However, Minchenko allegedly did not want to sell the company – he saw Sixa as a potential unicorn: the startup’s MRR [according to him – Ed.] was just under $2 million.

Many investors bought into the CEO’s tricks, and he was always in a hurry: meetings, trips, negotiations… Unlike Tandem, which invested in Sixa under a Convertible Loan agreement, most investors acted hastily and invested in Sixa under a SAFE (Standard Agreement for Future Equity), meaning rights for shares during the next round or deal, with no effective tools to protect their money. Why not? SAFE was in fashion in the early stages for promising startups; a couple of hundred thousand dollars were not so much, while the competition for such startups was crazy among investors.

Under a SAFE, investors have no information rights as well: they cannot demand reports and make legal claims in case those are not provided. And this is exactly what was needed.

The spin-offs looked no better. The Rivvr helmet had its delivery date being constantly postponed. Initially, customers were promised to receive the device in May 2017. Then the shipping date was put off to July, then October, then March, then April of 2018. In one of its newsletters, Rivvr explained that the first batch had allegedly turned up to have defective batteries, so the company had to withdraw it and postpone the release until it found a new manufacturer.

From the comments on Reddit:

“I can’t help but feel like this entire thing is nothing but a scam. They made a fancy web page then invest your money in CDs/stock markets or some shit for as long as possible, offering refunds when asked so no one gets suspicious but then when it hits the point of no return they refund everyone… only to put the pre-order page back up all over again.”

There was simply no news about the ICO. Here is an interesting detail: the funding went directly to Minchenko’s bitcoin wallet, and there is no information about this on Crunchbase or any other platform. Meanwhile, the wallet is still active.

The rabbit disappears

According to AIN.UA’s estimates, Sixa has about a dozen investors. These are 9 funds (Tandem, u.ventures, Digital Future, TMT, Gagarin Capital and others) and at least 4 angels. It is the investors who are the affected party of the story. Almost all the money raised by the startup has disappeared. However, only two of the investors responded to AIN.UA’s request concerning Sixa. The head of Digital Future Aleksey Vitchenko replied that “the contact with the company was lost” and requested to be kept informed.

“We believe that the development of the situation with this project bears indications similar to fraud. At least, at the moment it looks like this. That is why now we are consulting with lawyers who work with courts and law enforcement agencies to investigate the situation and the chances to recover the money,” said Artem Inyutyn, the co-founder and managing partner of TMT Investments.

“This is a rare case of strange and, apparently, dishonest management behavior; this is the first such case out of 50 projects that we have invested in. Therefore, we wrote off this investment in our portfolio. And, of course, we take all possible actions to recover the invested sum.”

According to comments by investors who wished to remain anonymous, Minchenko could ignore letters from investors for months, refuse to meet them under fantastic pretexts: now his relatives have died and he needs to fly to the funeral urgently, then he is in the hospital himself, and then still he is off to China, and there is no Internet. Reports were sent in PDF format, and, as noted by the sources, they were clearly fabricated.

For everyone, these relationships ended the same way: at some point Minchenko would simply disappear for good.

The lawsuit. The secret million

It will be recalled that in 2017, Sixa already had $4 million in publicly visible investments. However, this is not all the money that Mykola Minchenko managed to raise. Another million dollars of funding did not get into the media. But it did get into the judicial register of actions in the USA.

On March 13, 2020, the Superior Court of California registered a complaint by the UK’s Innes Wordwide Holdings against Sixa and specifically Mykola Minchenko. The statement of claim says that in 2018, Minchenko approached Innes with a proposal to invest $1 million in his startup. He assured the investors that the project would start generating profits 18 months after the transaction date.

The agreement was signed on December 21, 2019: Minchenko received $1 million under a Convertible Promissory Note at 3% per annum, and Innes, Sixa’s obligations to regularly report on its business achievements. Then the story repeats itself.

At first, Minchenko answered the letters of the investor after a fashion, but gradually the answers became farther and farther between, and the delays became longer. Minchenko would skip filing his business reports under various pretexts: now his accountant got sick, then she became pregnant, and sometimes it was both at the same time. Minchenko himself was also constantly “sick” and unable to answer Innes’s requests. Eventually, in the summer of 2019, the investor lost all contact with Minchenko.

Soon Innes discovered that the information provided by Minchenko at the stage of capital raising was false. More specifically, in his presentation he argued that Sixa had agreed to partner with major game developers from Korea and China. He also stated that Sixa already had 50,000 customers. Both of these were lies, according to Innes.

The lawsuit. Sixa against Minchenko

In July 2019, Sixa Operations LLC, represented by its sole manager, Nazar Banit, sued Mykola Minchenko, CEO of Sixa Inc.

According to the Plaintiff’s testimony (from the documents, which were received by AIN.UA), on May 10, 2019, Minchenko borrowed from Sixa Operation $2 million to finance its business Sixa Inc., which he had to return on May 31 with +1% of annual interest.

It should be made clear that Sixa Operations LLC and Sixa Inc. are different companies with different founders. Sixa Operations LLC was founded to provide operational services to Sixa Inc. of Mykola Minchenko. This was stated in the statement of claim:

“In fact, the Plaintiff company was founded (and named Sixa Operations) because it intended to work together with Defendant Sixa Inc. and provide it with some operational services. As described below, this was not possible because it is clear that Defendant Sixa Inc. a fraud.”

In fact, Banit founded the company for Minchenko as his key client (it’s like Foxconn makes smartphones for Apple). He expected to provide service to Sixa and even named his company by a similar name, Sixa Operations. But before the cooperation started, the key client (Minchenko) required money. And he borrowed it from the contractor (Banita).

Nazar Banit transferred the money to Mykola Minchenko in several tranches. According to Banit, Minchenko immediately converted it into cryptocurrency for personal use and then left the United States.

According to the Plaintiff, after he filed a lawsuit, Minchenko began to threaten that he would accuse the company Sixa Operations of illegal activities and even sic thugs on Banit if he does not withdraw the lawsuit.

Therefore, the plaintiff demanded an additional $2 million along with reimbursement of expenses. Thus, the amount of claims against Minchenko exceeds $4 million.

What does the company say?

The AIN.UA journalist failed to contact any of the founders, natives of Odesa, Mykola Minchenko (CEO) and Ievgen Nechaiev (STO).

Minchenko deleted his Facebook account, part of the data on LinkedIn, and does not answer calls and messages as well. All investors that AIN.UA has contacted do not know where he is now. The Bitcoinwednesday founder profile says that before Sixa, Minchenko worked for British Petroleum and was a co-founder of Almareks, an object recognition SaaS startup which was acquired by Motorola. He also helped develop a communication system for the Ukrainian army at the beginning of the military conflict in 2014. AIN.UA could not confirm or deny these facts.

Nechaiev published his CV and he is looking for projects. His profile on LinkedIn says that he left the company in January 2020.

Katerina Kondrunina, COO and business developer in 2016-2017, responded succinctly, “I don’t know. I have not been working there for a long time, and I live in another country.” AIN.UA interlocutors noted that in the beginning, it was Katerina who sent the reports to investors, which appeared to be fake.

AIN.UA managed to find only one person from the team, Sixa collaborator Andrey Volovik, (the project is listed in his LinkedIn profile). However, according to him, he worked with the startup only a couple of months in 2016, during the acceleration period at Y Combinator.

Now what

According to AIN.UA calculations, in addition to $4.06 million of publicly announced investments and $1 million from Innes Worldwide Holdings, Minchenko raised about $1.4 million more from various investors over the period from 2015 to 2019 (these transactions have not been disclosed and announced anywhere).

Thus, even after deducting $1.7 million from Tandem, Sixa CEO received almost $5 million in investments. And Minchenko personally received another $2 million in debt.

Minchenko does not appear in the US courts. At the address in California, which is indicated on his driver’s license, he has not lived for over a year. The company that Minchenko registered in Delaware has not paid taxes or filed reports since 2018. Sixa’s accumulated tax debt is over $400,000.

However, Sixa has not declared bankruptcy, in the Crunchbase database, the startup is listed as active, although most likely it never operated. Furthermore, there is no public reference to the fact that its founder is suspected of fraud. Perhaps, Mykola Minchenko is raising another round of investment for his new revolutionary idea right now.

How did this happen?

In a conversation with AIN.UA, some investors said that the last time they heard the news from the startup was in 2019. Some of them mentioned that “a couple of months ago, we got something” or “we suspect that the startup has problems.”

Answering the question of why they did not conduct proper due diligence and, subsequently, audits, investors blame the dizzying PR, the success at Y Combinator, and the competence of which “cannot be trusted.” But no one could explain why they did not keep an eye on the project. In other words, they didn’t keep track of their money, which had not brought the promised unicorn even after 5 years.

In Ukraine, Sixa CEO has no problems: no courts, no investigations. And considering the fact that some local investors lost contact with him back in 2019 and have not taken any action, he will have none.

AIN.UA has selected the highlights.

About The Ad Masters

Within the Ukrainian IT labor market, The Ad Masters is billed as a developer of advanced online-sales and marketing software for entrepreneurs and e-commerce business owners. However, according to those interviewed by DOU, the company has actually been developing just one product, which is a website selling diet pills in the USA.

“Having bought a set for $139, a person would subscribe for monthly deliveries and monthly charges from their card. It would take several months for the customer to figure this out. And as we learned later, there were either no pills at all or just something like Vitamin C dragées,” says Pavlo, a former employee.

So that banks would not trace the scheme, so-called pre-landing pages were created. DOU has obtained a list of such pages:

What ex-workers complain about: layoffs without pay

Just a few people among DOU’s interlocutors worked in The Ad Masters for more than six months. Usually, employees would not spend as much as a month there. Some of them were fired immediately ahead of the payday. Sometimes this caused whole departments to leave.

Yaroslav Bokiy, the former HR Director, has told one of such stories:

“I’ve been working for 16 days, and during that period, I’ve only had one day off. Some day, Larby told me to fire my subordinate Mykyta Melnykov without giving a reason. And the day before that, Larby has raised Mykyta’s salary. When I was told to fire another two people, I realized that they were probably not going to receive their pay either. I gathered my department, told them everything, and said I was leaving. Everyone decided to leave also. This was on the twelfth. And the next day we were not paid our salaries,” Bokiy says.

According to Yaroslav’s estimates, Amirouche did not pay at least 8 employees from his team for their work. He also says that his colleagues have filed a group report to the police.

Similar cases have been described by commenters on DOU’s website.

“Our whole department quit on our own accord because we realized there was reason to stay and waste our time. The parting was far from rosy: we were refused the pay under the pretext of ‘having worked ineffectively.’ And it turned out that all the people who were fired did not get their pay for the same reason,” says the IT recruiter Valeriya Bors in her comment on DOU.

“I have been working in this company for 14 days as an HR department project manager. During the whole period, I was being told that I was doing well. On the morning of the 14th day, the CEO and I were discussing my KPIs for the next month. Besides, he offered me a promotion and a salary raise. But on the same evening, my colleague from the HR department, having no clue, called me and said that he was asked to tell me that I was fired and, in fact, not expected to come to work from the next day on. And of course, this happened right before the payday,” Mykyta Melnykov writes on DOU.

CEO’s mood swings

Some people interviewed by DOU note the CEO’s combustible temper.

“Our CEO’s mood swings seemed shocking in the beginning. There were also several occasions which frightened us. For example, once, while talking to the subordinates, Larby started yelling and actually put his fist through a plasterboard office wall,” recounts Bohdan, an ex-programmer.

“Once Larby fired me but changed his mind in three minutes. It was a record. As for other people, he could praise them at three pm and fire them at six pm with no explanation. Eventually, I quit on my own accord. The final straw was that many of my colleagues did not receive their pay after the dismissal,” Pavlo recalls.

Overworking, no days off, and fake reviews

According to ex-employees, oftentimes they had to work until late at night, as well as work on weekends. Those surviving it for longer than a month could not get leave, even an unpaid one. There was no overtime premium.

Some employees performed work outside of their duties. For example, the programmer Bohdan admits that from time to time he was engaged in recruiting and even “daylighted” as a storekeeper.

Former employees also recount being forced to write positive commentaries about the company on DOU.

“As soon as a negative review appeared on DOU, Larby would immediately make someone from the office write a positive one. Once he made me do it too; later I deleted that review and wrote an honest one,” Pavlo says.

The editorial team notes that immediately after the publication of The Ad Masters’ vacancies on DOU, nine users complained about junk mail from the company’s recruiters. After that, five users at once posted favorable reviews, which were, though, followed by a barrage of negative ones coming from ex-employees.

Intimidation and personal data breach

Some commenters claim they have been intimidated by their ex-boss.

“A person called, introducing himself as Amirouche’s lawyer. He said I had 12 hours to delete my comment on DOU. Otherwise, they would find my parents’ contacts and sue me. I said I didn’t mind litigation,” says Bohdan.

He provided screenshots of his Telegram conversation with Amirouche. The latter was threatening to complain about the “inappropriate behavior” of the former employee to his University teachers and his mother whose telephone number he would procure with the help of a private detective.

Amirouche also threatened Bohdan that he would get back at his friends. Probably, this referred to the developer’s colleagues still working at the company.

The editorial team has also obtained emails sent from the address larby@theadmasters.com to the mailbox of the FSB of the Russian Federation. In those messages, their author accused Bohdan and Pavlo of hacking, destroying his business, and working for Saudi Arabia’s oil industry. What was more, he attached copies of their passports.

Who is Larby Amirouche?

There are quite a few things known about The Ad Masters’ CEO Larby Amirouche. According to DOU’s findings, there were several lawsuits brought against him (or a person with the same name). The plaintiffs were the Attorneys General of Illinois and Arizona.

In both cases the businessman was accused of internet fraud with the sale of acai berries that were popular at that time. The Attorney’s office claimed that mister Amirouche had misguided customers by offering the first package for free and then charging the money from their credit cards.

Larby Amirouche’s company was also one of the fifty firms sued by the famous television presenter Oprah Winfrey back in 2009. She accused the companies of illegally using her name in acai berry ads.

The outcome of the litigation in Illinois is unknown, but after a similar process in Arizona mister Amirouche and the other defendants consented to pay a fine of $175,000. This was reported by the newspapers Courthouse News Service and Legal Newsline

AIN.UA talks about the investigation of Dagens Nyheter and shares new details of a multi-million-dollar scam.

Getting people’s attention

• Milton Group published a fake advertisement on social networks. On it, Hugh Jackman, Gordon Ramsay, and other celebrities advertised investments in bitcoin, precious metals, and other assets.
• Those who swallowed the bait were “processed” by call center operators. The call center is located in the Mandarin Plaza business center in the very center of Kyiv.
• The victims were promised high profits without serious risks. Journalists describe several frauds involving elderly Swedes – this audience was considered one of the most profitable.
• Operators cozied up to the victims by following the instructions: at first, they showed interest in people’s lives, and gradually switched to the point. They would create client files with status and key events.

How to diddle people out of tens of thousands: details of the Milton Group’s scheme

• The first tranche – one thousand Swedish kronor (about $100). Then they would install remote access software (AnyDesk or TeamViewer) on computers and an extension for embedding code on pages. As a result, the appearance of realistic transactions was created.
• Victims thought their assets were growing by leaps and bounds, while operators took short-term loans in their names at rates up to 39%. People could not cash out their income.
• Just as the situation was becoming critical, the second category of scammers came into play. These were the “saviors” – they would report that the missing funds were found. To receive them, you only had to pay a commission and tax. Sending money did not change the situation.
• Dagens Nyheter provides several eloquent illustrations. Thus, a 67-year-old Swede named Mai-Britt sold the house. A 73-year-old retired ambulance driver Kent Lundin has invested tens of thousands of dollars.
• A man from the Czech Republic suffered a record loss of about $200,000. A Swedish citizen of Iranian descent paid approximately the same amount.
• Many clients were “processed” by a man named William Bradley. In fact, it was an Iranian Javid Hamze. He even boasted that he had obtained about $150,000 from one of the victims. People filed complaints against him and the Milton Group with the Swedish police, but local law enforcement officials were in no hurry to investigate.

• In total, according to The Guardian, we are talking about citizens of 50 countries. The operators were divided into segments by language: Russian, Spanish, English, Italian. However, the scammers tried to avoid the Americans, so as not to attract the attention of the FBI.

Scale of the Milton Group project

• Dagens Nyheter collected their data thanks to the many months of work of their own source within the Milton Group. The source took pictures of the workflows of the company, employees, and collected data.
• In total, the Milton Group employed about 200 people. To avoid data leaks, employees were forced to leave phones at the entrance to the office. And to motivate the employees for the fulfillment of plans the company paid bonuses.
• The income of managers who made a large number of calls was based on commissions. Credit card transactions yielded 4%, transactions through transfer services like Western Union or Moneygram – 6%, transactions through cryptocurrencies – 9%.
• As the editors of AIN.UA managed to find out, bank payments were accepted through the British operator Clear Junction Ltd. Earlier, AIN.UA already wrote about it – this company registered its payment system in Ukraine, it also presented euro accounts for Monobank. It is owned by Dmitry Katz, who also has business in Ukraine.
• Mass media allege that the turnover of Milton Group with all its brands in 2019 alone amounted to $70 million. The organizers talked about $50 million and $65 million at different times.
• Milton Group CEO Yacob Keselman called the description of their work as “incorrect” and said that the company provides IT support services

• Journalists from OCCRP write that the Milton Group has connections with call centers in Albania, Georgia, and Northern Macedonia. AIN.UA journalist managed to find a resume of a former Milton Group employee who notes “opening an office in another city” but does not disclose the location.

Milton Group. On paper and in reality

The journalist of AIN.UA further investigated the business of Milton Group and its affiliates. The key positions are occupied by Georgian nationals who do business in Ukraine. Some of them are former Georgian officials, and some have already been accused of illegal activities.

• There is not much data on the Milton Group in Ukrainian registries. Milton Group LLC was founded in 2016, its specialization is computer programming. The authorized capital of the enterprise is UAH 2.6 million, and the revenue in 2018 supposedly did not exceed 4 million. The only official beneficiary of the Milton Group is Georgian national Irakli Dadivadze.
• In the journalistic investigation, the employees say that the real owner is another person, Georgian-born Israeli citizen, David Todua. He is associated with the forces of the United National Movement party of Mikheil Saakashvili.
• Todua owns the Cyprus payment company Naspay, through which most of the funds passed.
• In Ukraine, Dadivadze and Todua have an extensive network of companies.
• The second major business registered in the name of Dadivadze is Lime Consulting. It also presents itself as an IT project, but indirect signs suggest that it could operate in the online casino niche.

• Lime Consulting has an office in Arena City, as well as active recruiting activities, where newcomers with no experience are promised to get an income of $2,000 – $3,000 within the first 4 months.
• Sales managers prevail among the available openings of the company; there is language segmentation (such as Swedish, Polish, German). Responsibilities: telephone, ability to retain a regular customer, and no specifics for the product.

• Former Milton Group employees openly write that the company is selling binary options and other fake assets. They also describe other facets of the work: they were forced to work while standing and provide their life histories during employment.
• Several users mention that in May 2018, law enforcement officers visited the Milton Group’s office with a search. They allegedly seized computers and documents and also informed them about the initiation of criminal proceedings. But in the court register, there is no mention of this search – as well as of the Milton Group legal entity in general.
• David Todua has several businesses in Ukraine, established in partnership with the former Minister of Defense and Director of the Georgian Financial Police, David Kezerashvili. In 2013, he was accused of bribery and smuggling of alcohol to Ukraine.
• Through the joint Project Partners LLC – which is also engaged in IT programming – Kodua and Kazerashvili own the Firma Spets-trading Company and a share in Elitkomfortbud.
• Former Georgian officials have been appointed directors and authorized persons. So, the head of the Firma Spets-trading Company Gia Getsadze is a former deputy minister of justice of Georgia (she held the same position in Ukraine). And the co-founder of Elitkomfortbud is Petr Tsiskarishvili, the Minister of Agriculture of Georgia in the Saakashvili government, writes “Slidstvo.Info”. However, no real ties between these enterprises and the business of Milton Group have been found.

The ICO should have increased this number 40-fold by 2022 – to a phenomenal 120 million (for comparison, Netflix has 167 million paying subscribers). It was expected that Divan.TV 2.0 on the blockchain would start working from the end of 2019. The year 2020 came, and the ICO didn’t happen. Moreover, nobody has talked about it for almost a year now.

AIN.UA journalist could not confirm Divan.TV’s performance indicators in conversations with current and former content providers. The company did not respond to AIN.UA requests. Andrey Kolodyuk, the founder of the project, also did not respond to AIN.UA’s requests repeatedly sent to him via email and social media.

But what we managed to find out was multimillion lawsuits and debt to Fox. Before the acquisition of Fox by Disney in 2019, the company belonged to American billionaire Rupert Murdoch.

AIN.UA journalist traced the chronology of how the debts were “reregistered” to a saleswoman from Obukhiv [Editor’s note: a small town in Ukraine], as well as analyzed the unclear business performance indicators of the service in the media and presentations for investors.

Welcome to Ukraine, Rupert Murdoch

In 2015, the representative office of the U.S. media giant Fox (Swiss Fox International Channels Luxembourg) sued Divan.TV. The Ukrainian service did not pay for the content. It accumulated a debt of ₴1.5 million. In 2017, RBC Ukraine already described the status of this case.

In September 2016, the Economic Court of Kyiv resolved that Divan.TV (represented by LLC Divan.TV) should pay Fox $57,400 for broadcasts from January to September 2014. Kyiv Commercial Court of Appeal finally rejected the appeal of the defendant on November 22, 2016.

Later, the press service of Divan.TV admitted that the company had a debt and repayment plans. But the plans remained just plans. Divan.TV complained about Fox’s unwillingness to reach a compromise:

All channels, except Fox, have renegotiated their contracts with us on new terms. The owner of Fox, represented by Rodion Pryntsevsky, General Manager of Fox Networks Group in Northeast Europe, refused to come to mutually beneficial agreements, putting us in non-competitive conditions. <…>

But when they [Editor’s note: Fox] began to issue invoices even after our official request, we refused to repay the debt.

Representatives of Divan.TV informed RBC-Ukraine that they have never repaid the debt.

That was the end of a previously known part of the story.

Mug’s game: two Divan.TV

An unknown part of the story began almost simultaneously with the end of the trial. Divan.TV just got rid of a legal entity with debts. A step-by-step chronology of this scheme is given below.

In March 2016, six months before the court ruled in favor of Fox, Arkadii Kaniuka became the director of Divan.TV. He has been the CEO of the service since 2015, and now he is also the director of the legal entity.

In November 2016, a week before the appeal was denied, Divan.TV LLC changed its name. The company began to be called Multimedia Group Ukraine LLC, and Lubov Polishchuk became one of its representatives in court by Power of Attorney.

Four months later, in March 2017, Lubov Polishchuk replaced Arkadii Kaniuka as the director of Multimedia Group Ukraine LLC. And three months later, in June 2017, Polishchuk became the full owner of this legal entity.

Since 2012 the owner of Divan.TV LLC was a Cyprus company Mikarnial Ltd, whose key beneficiary and controller is Andrey Kolodyuk. However, at the same time, when Polishchuk took up the position, Mikarnial Ltd, and therefore the entrepreneur himself, left the ownership of Multimedia Group Ukraine LLC. Divan.TV did not comment on such reshuffles neither then, nor now.

Journalist of AIN.UA could not contact Lubov Polishchuk. However, according to YouControl, she (or her full namesake with an identical address) is listed as a manager in 22 other companies. It was also impossible to contact other representatives of Multimedia Group Ukraine LLC, the contact details of the company from the registries are invalid. And this is not an accident.

Lubov Polishchuk is not a serial entrepreneur but a saleswoman from Obukhiv, as journalists of Bihus.info found out. She sold her passport data, which was used by dozens of legal entities. Among those fictional companies are, for example, an Opposition Bloc party donor and a company that has been involved in corruption scandals.

All this time, the Divan.TV service hasn’t stopped working. However, instead of Multimedia Group Ukraine LLC (formerly called Divan.TV) it has a new legal entity – Finart Capital Invest LLC. Previously, this company was owned by Kaniuka and engaged in financial services, and, since March 2017, the notorious Mikartial Ltd became the owner of the company. The transfer took place simultaneously with the appearance of Lubov Polishchuk in the former Divan.TV LLC.

Finart Capital Invest LLC is the recipient of funds for the service Divan.TV, it is also listed on the website of Datagroup as a provider of Divan.TV service. At the same time, according to the service offer, now all services are provided by Mikarnial Ltd. This company also owns trademarks of Divan.TV, and publishes service applications for Android and iOS.

Co-owners of Mikarnial Ltd, which is still behind Divan.TV, as of the beginning of 2020 are already well-known Andrey Kolodyuk, Denis Lukash, and Arkadii Kaniuka. Ownership is carried out through a number of legal entities: Meresta Investment Limited, Medoliv Trade Inc., For-com LLC, etc. Denis and Arkadii are minority shareholders – they have 6% and 1% of the shares, respectively.

It is noteworthy that the founder of Mikarnial Ltd was Sykon Holdings Ltd, which performed secretarial functions (registered and transferred legal entities to others) for more than 100 companies. It appeared in the corruption schemes of the former Minister of Energy Eduard Stavitsky and a number of other scandals.

After the Ukrainian court sided with Fox in November 2016, the enforcement service gained access to Divan.TV / Multimedia Group Ukraine legal entities accounts. No money was found there, the debt could not be written off – this is confirmed by the fact that the case is still open on the website of the enforcement service, as well as according to sources familiar with the situation.

Audio recording

In Divan.TV, the change of ownership of Divan.TV LLC that lost the litigation to Fox, was never explained publicly. It was only reported that the new team has no control over the former legal entity.

The sale raises questions: if this is a real deal, then what did the buyer in the person of Polishchuk get except for the legal entity that lost the court? The service began accepting money through a new company, and Mikarnial LTD retained all trademarks. There is no official answer, but AIN.UA got an audio recording that sheds light on some previously unknown things.

On the recording, people who introduced themselves as Divan.TV employees – CEO Arkadii Kaniuka and Content Procurement Director Elena Kohanets – talk to a person who introduced himself as Rodion [Pryntsevsky, Fox Regional Manager in Ukraine]. The subject of the conversation, which can be dated to the end of 2017, is the payment of Divan.TV’s debts to Fox and the resumption of cooperation.

E.K .: – In fact, the legal entity that signed the contract – LLC Divan.TV is no longer under our control. We have no power over it. This lawsuit forced us… We had huge financial problems and we would not have survived it. We had to sell our software solution along with debts in full. Divan.TV service and legal entity are two different things.

When asked whether evasion of paying debts was a lie, people who introduced themselves as top managers of the service answered in the affirmative:

E.K .: – Back then it was the only way to postpone the issue until the moment when it would really be handled.

R.P.: – So you lied to us?

E.K .: – Well, probably. Although in business it is called differently. But in fact, Andrey Viktorovich left the service for his personal reasons, unknown to anyone. And he said: “Try to decide as you see fit.”

As a result of this conversation, people who called themselves representatives of Divan.TV in 2017 wanted to sign a new cooperation agreement with Fox. They offered to pay the debts through the Cypriot offshore Micarnial Ltd, and only after Fox resumed the streaming. The man who called himself the Fox representative responded with a willingness to turn on the streaming, but only after the debts are paid. There is no Fox content on Divan.TV today.

Ctrl + C, Ctrl + V – “Continent TV”

The same story was publicly told by Continent TV CEO Dmitry Tatsiy. This is another provider who won a lawsuit against Divan.TV for pirate streaming:

• In May 2016, Continent TV was in talks with Divan.TV regarding the distribution of the Trophy, Trophy HD channels. The contract was not concluded, but Divan.TV still streamed channels from May 1 to September 30, 2016. The service denies it.
• In October 2018, Continent TV LLC went to court, asking LLC Multimedia Group Ukraine, known to us as ex-Divan.TV, to pay UAH 169,650. The Commercial Court of Kyiv refused to satisfy their requirements.
• The court of appeal upheld the claim but reduced the amount of compensation to UAH 96,050. They had to be written off from Multimedia Group Ukraine LLC (the successor to Divan.TV LLC).

But is there anything to take from a debtor who has been transferred into the ownership of a saleswoman from Obukhiv? According to the YouControl analytical system, as early as April 2018, the Multimedia Group Ukraine had their VAT certificate canceled – the company did not file a declaration within a year. It also has incurred a tax debt in the amount of UAH 5,665 and has had no revenues since 2016.

When Continent TV won the litigation, its CEO Dmitry Tatsiy publicly accused Divan.TV of changing legal entities. His words in Detector.Media repeat the Fox scheme described above:

Previously, the company provided service as LLC Divan.TV, then this legal entity was renamed to Multimedia Group Ukraine LLC, and in the future, it was changed to another legal entity Finart Capital Invest LLC. Such active actions to change legal entities, together with high-profile litigation, testify to the company’s intentions to avoid financial responsibility for lost court cases.

In response, Arkadii Kaniuka said only that Multimedia Group Ukraine LLC is not related to Divan.TV brand.

There were others

In general, Divan.TV almost from the very beginning had problems with copyright holders. Even at the dawn of its existence, the largest Ukrainian media groups were suing the company for illegal broadcasting of “1+1”, “2+2”, STB, “New Channel”, ICTV, and “Ukraine” channels. In 2015, it came to seizing the servers, which, it should be noted, were returned two months later due to failure to prove Divan.TV’s guilt.

In recent years, Divan.TV has been accused by other companies of failing to fulfill financial obligations, and those companies also won in court:

• Lawsuit from the MGB Ukraine (History TV channel) for UAH 297,000.
• Fox lawsuit for $ 57,000.
• Lawsuit from Continent TV for UAH 96,000.
• Lawsuit from “Tekhnologii setei” for UAH 218 000.
• Lawsuit from Mediakast for UAH 154,000.
• Lawsuit from the Russian TV channel Dozhd for an unknown amount in a Russian court. Previously, a fine of UAH 350,000 was in the news.

AIN.UA contacted all the companies from the list. Only the Russian Dozhd and Continent TV did not respond to requests. The rest either said that they settled the issue, or gave non-public comments that were used to verify the remaining evidence.

Multimillion user base was ‘made up by the PR-service”

Tatsiy from Continent TV brought another accusation: when signing contracts, the company manipulates data on the number of subscribers:

Divan.TV declares in open sources that it provides its services in more than 200 countries and declares its subscriber base at the level of 700,000 subscribers. However, when it comes to negotiations about granting distribution rights for channels, Divan.TV underreports its base and specifies numbers that are hundred times less.

Representatives of Divan.TV did not comment on that. The size of the user base is important because content providers charge a flat fee for services. In Ukraine, it ranges from UAH 5 to 95 per each user that is subscribed to a paid package. It is beneficial for the Internet TV service to understate numbers in a conversation with content providers and to overestimate them for PR, including confusing paying subscriptions with lifetime registrations.

People who introduced themselves as top managers of Divan.TV, on the audio recording mentioned above, recognize the discrepancy between public and real data. Another quote from their conversation:

R.P.: – We constantly read in the press how successful you are, how many years you have already been profitable, and how all is well.

E.K .: – For this, we have a PR department. Do you believe everything that is written on the Internet?

R.P.: – I don’t know. We publish the truth about our company.

E.K .: – This is the choice that you made, we have a different choice. We have a PR department and it [works] separately. We often hear from many partners such statements [about the success of the project], but then we give access to billing and the questions disappear. You read one thing, and then you look and it is written in small print: “These are all subscribers not registered on a paid basis.” We understand that now it’s practically impossible to lie to about the subscriber base. We have never had 40,000 subscribers. And we cannot even dream about such a huge user base now – because we do not have such good content as others have.

The woman who introduced herself as Elena Kohanets tells another reason why the service needs to manipulate the user base – that is its activity in Western markets:

E.K .: – PR is focused more on the international market for attracting b2b partners from all over the globe. Somehow it is a custom to provide all the information in a good light. We do not interfere there. Free subscribers and views are written…

How much profit does Divan.TV generate and from what?

In a presentation by Andrey Kolodyuk for potential investors in February 2019, the service has 3 million users, who brought $5 million in revenue in 2019. But how many of the claimed 3 million users are paying users remains unknown. Unlike Netflix, many users of Divan.TV are not paying subscribers. And unlike Megogo, there is practically no monetization of users with a free package through advertising.

According to the source of AIN.UA’s editorial office in one of the content providers, the paying audience of Divan.TV in 2014 was 5,000 people globally, and in 2019 – 10,000 – 20,000 globally subscribed to a basic paid tariff. This is unverified data. But we are still talking about tens, not hundreds of thousands of paying users. The editors of AIN.UA below offer several approaches to checking the claimed revenue of a service.

For example, for Megogo to generate $ 5 million in revenue in 2017 on the Russian market (which is also the main one for Divan.TV, according to their own presentation), 350,000 users made at least one payment to it.

Based on the cost of Divan.TV subscription plans (from UAH 59 to 299 per month for Ukraine and up to $13 per month abroad) in average proportions, the service needs at least 500,000 paying users to generate $5 million per year.

350,000 or 500,0000 – all this is far more than the 40,000 paying users mentioned in the audio recording. Which, moreover, is declared as a difficult goal to achieve.

According to YouControl, LLC Divan.TV / Multimedia Group Ukraine showed a peak revenue of about UAH 14 million in 2016. And that is with the obligations of the company amounting to more than UAH 52 million.

Finart Capital Invest LLC – which accepts service payments in Ukraine – in 2017 showed UAH 13 million in revenue. In 2018, revenue decreased to UAH 10 million.

If it is true that according to Divan.TV, 54% of users are in the CIS, and the largest market in Russia, then Ukraine, at best, has a quarter of the audience. If we calculate that it brought in UAH 13 million, then the global revenue of Divan.TV in the most optimistic scenario would not exceed $2 million. But there is a nuance here.

Russia, as stated in the presentation, is the largest market for the service, but the Russian branch of Divan.TV LLC with registration in Belgorod does not demonstrate this.

According to the extract from the SPARK database (which is in possession of AIN.UA editorial office), the total debt of the enterprise is about 2.4 million rubles, while current assets are only worth 27,000 rubles. The company showed its revenue only once, in 2016, and it amounted to 585 (five hundred eighty-five) rubles. And in July 2019, by a court decision, Roskomnadzor also deprived Divan.TV LLC of mass media status and a broadcast license, according to the regulator’s website.

All that put together casts doubt on the veracity of alleged Divan.TV revenue. And user bases.

Investor confusion

Another question is how much investment the service attracted and from whom.

At the start of the project in 2011, it was reported that AVentures Capital invested $1 million. Later, in an interview with AIN.UA, Andrey Kolodyuk said that the investment account “is well into the millions.” Crunchbase reports that AVentures has invested $2.5 million in Divan.TV spread over two rounds between 2010 and 2011.

AIN.UA also managed to find a CV of the partner and co-owner of Divan.TV Denis Lukash, where it is indicated that he helped the company to raise $1.2 million in two rounds between 2010-2014. Finally, according to the presentation prepared by Divan.TV for investors, by 2019 the company raised a total of $6 million in a single round.

Divan.TV is still listed on the unofficial website of the AVentures Capital [Editor’s note: the unofficial website is listed in the fund’s profile on CrunchBase, the partners of the fund write emails from its domain, but the author couldn’t find the official site]. However, AVentures was not found among the legal structures of companies whose connection can be traced back to Divan.TV.

Yevgen Sysoyev, a Managing Partner of AVentures, confirmed this: Divan.TV is Andrey’s personal project. Why it appears on the fund’s website is unknown.

ICO that never happened

In 2018, Andrey Kolodyuk actively commented on Divan.TV’s plans to enter the ICO. The company planned to launch its own D1T token in the second quarter of 2019, and the updated Divan.TV 2.0 platform in the third quarter of 2019. Users would have to receive tokens in exchange for viewing ads and spend them to access premium content.

To launch a blockchain platform for advertisers, Divan.TV planned to attract bridge financing in the amount of $5 million. This is a short-term loan for the development of the company at 8% interest and without dilution of interest. Investors were promised a 20% discount in the next round.

Among others, Alexander Bornyakov, founder of the advertising company VertaMedia (Adtelligent), and now – Deputy Minister of Digital Transformation of Ukraine, was specified as a technology advisor and investor in the service.

In response to a request from AIN.UA, Alexander Bornyakov said that Divan.TV was going to use its Adtelligent platform. They really started working with Kolodyuk in 2018. But three months later, Kolodyuk decided not to hold an ICO: supposedly this is no longer interesting to anyone. “It became clear that there will be no ICO,” Bornyakov noted in a comment to AIN.UA. For a while, the companies still worked together, but it did not lead to anything concrete.

Now no one remembers the ICO. As well as plans to reach 120 million users. Or about debts to the American company Fox, which have not been repaid.

In the meantime, the service continues to work, carries out advertising campaigns, and enters into partnerships with TV producers. And Andrey Kolodyuk himself has already approved the idea of Alexander Tkachenko (in the past the general producer 1+1, currently the MP from the “Servant of the People” party) to introduce a tax on Netflix and YouTube content. After all, foreign services “should be put in the same conditions as Ukrainian services in terms of taxes.”

But as far as the same conditions for paying debts and disclosing performance indicators are concerned – he did not provide any details. In December 2019, his Cypriot Mikarnial Ltd increased the authorized capital of Finart Capital Invest LLC by UAH 1.7 million: from UAH 804,000 to UAH 2.56 million. This is more than what is owed to Fox. Nonetheless, the debt is now on the shoulders of a saleswoman from Obukhiv.

Network’s outreach exceeded that of The New York Times and Washington Post. The flagship page I love America received over 1 million likes. From the beginning of September, the public pages began publishing content supporting Donald Trump.

The story appeared in the headlines of the U.S. mainstream media: Washington Post, Huffington Post, Los Angeles Times wrote about it. In response to the public reaction, Facebook has blocked the pages. Initially, the social network claimed that they are in no violation of the standards, but when it was removing the pages it referred to the rule regarding fake content.

AIN.UA’s editor talked to the key figures in the story. Part of the interview recorded by AIN.UA’s editor was also published in Popular Information’s article.

Main figures

The only person whom it was initially possible to connect to I Love America was an Odesa native Andriy Zyuzikov. A website specified in the page’s description was registered in his name. In his comment to AIN.UA, he explained his role in the project.

According to Zuzikov, he merely helped the network at the initial stage. Zuzikov has nothing to do with its further promotion.

I helped at the initial state to tackle technical details of operation and monetization in Facebook. All the work in terms of promotion has been done by my colleague alone. He is a marketer that moved from brick and mortar to online.

And why does he publish posts about Trump? It is only because of their virality. He tested multiple topics: animals, humor, citations, patriotism, and politics. Users from the U.S. best reacted to politics, so he began publishing content in this direction.

Zyuzikov noted that he is not familiar with the political narrative. Later he said that his ‘colleague’ is a Ukrainian national Andreii Tkachenko. In his conversation with the editor from Popular Information Zyuzikov said that he and his partner developed different views because of the political nature of the content. 

I realized that sooner or later an editor like you would show up who would write about the Facebook page in a negative light. And I was right. And you are also right. Such pages should not exist on the Internet.

AIN.UA talked to Andreii Tkachenko. He admitted that he was behind the network of public pages and called it an ‘American farm.’ Below are quotations from a conversation with Tkachenko, which are slightly edited for clarity of narrative and explanation of AIN.UA’s editor.

Who is behind the farm

Tkachenko said that the farm is one of incidental projects of his company IQFormat OÜ. The business is run by three persons remotely.

Our company is called IQFormat OÜ and is registered in the European Union. It has no representation in Ukraine. We help administrators to run businesses in social media and monetize their communities. 

AIN.UA found the company. IQFormat OÜ LLC was registered in Estonia back in 2016. Its registered capital is 2,550 Euro. Its registered activity is information technology and computers. Currently, its members of the board include Andriy Zyuzikov and Anatoliy Zaitsev. Until April 2019 the same role had Simran Niftaliev. AIN.UA editors were not able to establish a legal connection between Andreii Tkachenko and QFormat OÜ or any other Estonian company.

Andriy Zyuzikov’s curriculum vitae also says that he has been CEO at IQFormat OU since October 2016. His page in LinkedIn says that the company creates networks of Facebook pages for promotion of clients. Currently, they boast over 5 million subscribers. Also, IQFormat OU does video branding and creates web-services for SMM. 

Here is their complete list:

• FBpartner.club/en
• FBstatistics.com/en
• ContentMoney.com
• VideoReact.com
• FeedSpy.net.

Andreii Tkachenko’s profile is available in LinkedIn. He is specified as a co-founder of IQ Format since April 2015. 

In his conversation with the editor from AIN.UA Tkachenko mentioned two social services that bring him main revenue:

Our key business is traffic monetization services for Facebook administrators. Not everyone wants to configure their websites to direct the traffic there.

For instance, Content Money allows administrators to publish articles with unique UTM markers and get up to 70% of funds earned on advertisement. We take the remaining amount and share it with authors. The content is exclusively from entertainment domain, not a political one.

Our other project, Facebook Page post Exchange website, allows administrators promote pages without using advertisement. They can find partners in social media and exchange posts. This way one can efficiently increase engagement and grow audience.

This is where we get our primary income from and this is where we apply our most effort. All this is legal, and we do not deal with the ‘black’ content out of principle.

How the content segment emerged

Farms are incidental business of the company. Tkachenko initially organized a network of public pages targeting Russian-speaking audience, which attracted about 6 million subscribers. Then he realized that it is a promising niche, which is well worth investing into.

That was the beginning of a network of American public pages:

The second farm is an American farm. Foreign direction appeared in 2017 and was rather a hobby, out of curiosity. I became interested in a new, high market. So we tested out our offer. Of course, we invested a little for the start and bought some traffic.

But we are not millionaires, our investments were humble. Far from a million dollars, like with Znaj.ua. Moreover, I know the extent of how Facebook is geared to get the money. If you overdo with monetization, you will not get organic growth.

Tkachenko explained the selection of topics by the absence of negativity and relatability. He mentioned a few times that he does not work with problematic content:

We would select a simple and understandable to us content that we used in our work. All the topics were relatable. Jesus because I am a religious person myself; funny animals because my daughter loves them; patriotism because I relate to it. 

Tkachenko refuted claims about coordinated information attack or attempts to influence American elections. He said that he was not trying to deceive the audience:

We have never pretended to be Americans. In the page description, everybody could check from where are its administrators. No political party or lobbyist hired us to do it.

Our principle is as follows: “We do not analyze tastes, we analyze numbers.”

American farm grew fast and soon the number of public pages exceeded one hundred. It is because of the diligent work with the content and audience, the entrepreneur explained:

This social network really values the indictor of the originality of the content. Complete copying is not welcome, while partially tweaked content is admissible. Usually, you need to edit 15%-20% of the material. That is what we did. For instance, we would slightly change an image or think up an inscription.

How the farm worked

Tkachenko shared the details of the farm’s operation. The entire American direction was managed by a mere 3 administrators. They would update 20-30 pages daily and worked virtually in an automatic mode. The content itself was of a secondary concern, the first place was always the virality of it.

We had internal services that would collect viral content from all over the social network and provide relevant tips. For instance, it would demonstrate the most popular comment along with the post. This way we were able to understand what tone should be given to the post.

The content would go into the database. From there the farm administrators would pick it and slightly change it. For example, they would think up inscriptions. There was also a database of freelancers who would check the basic legibility of inscriptions for a nominal fee to avoid clearly laughable mistakes.

The administrators did not even know English. Usually, they would simply take images, for example, about veterans, and write a slogan like “God bless America!”

One of the administrators was a 13-year-old daughter of Tkachenko. The child was in charge of public pages featuring cute animals. The entrepreneur is confident that this experience would help her in adult life and he sees the future in social media. He says that he would be happy to organize an educational project for youth to learn how to work with Facebook.

The notorious page I Love America had another administrator:

The other administrator was a senior disabled lady, Ludmila. I taught her everything from the beginning. I hired her based on the recommendation of my wife: in her childhood, Ludmila treated her well and helped her in difficult life situations. And now Ludmila is very sick. She has serious problems with legs, her relatives gave up on her and she found herself helpless. That was Ludmila who primarily handled I Love America. Believe me, when the public page was blocked she was very anxious. She thought that she made some kind of a mistake or missed something.

How and why political content emerged

We became interested in political content a few months ago. Algorithms began to suggest that users actively interact with such publications. In parallel, the team began to be bombarded with suspicious offers:

They wanted to bribe us – both the Democrats and the Republicans. They wrote from fake accounts, offered significant amounts. I am sure that a professional team was behind this campaign.

Testimony of Tkachenko and Zyuzikov concur on the matter of Trump — he was elected because he is popular.

We chose to write about Trump based exclusively on numbers. It was stupid not to publish anything as it is a hot topic in the U.S. We saw that and decided not to ignore that.

There is also the Trump 2020 direction. But is that really bad? Isn’t the U.S. president an objective reality? We started publishing because the algorithm showed a hot niche. That’s the whole story. 

Publications that included Trump were extremely popular, collecting 100,000 reactions per post. We also tried to monetize the topic, first through the placement of affiliate links, which redirected to merchandize in his support. 

The main focus was not on political content, says Tkachenko. We tried to pick posts about his family, grandchildren, or simply patriotic slogans. 

How the monetization was done

Tkachenko repeatedly indicated that they monetized the American network a wee bit and only in test mode. 

We just checked from time to time what works and what doesn’t. For example, we engaged our American partner and connected video ads. 

But no one was after the money. I considered the farm as an asset and the profit was measured by the growth of subscribers. Without an emphasis on earnings, it was significantly larger. After all, American users are very valuable. They are estimated at $ 100-150 per 1,000 people on the black market. Of course, we do not resell users.

According to him, if the team would actively begin to redirect the traffic to external resources and monetize the public pages, the organic outreach would collapse. This was not part of the plan.

I estimate my loss due to blocking at $ 1 million. In general, if we monetized everything in the maximum mode, we would earn up to $500,000 per month.

On accusations of disinformation

Tkachenko admitted that the quality of the content was not particularly monitored. The numbers were the key to everything. 

I will not be economical with the truth. Perhaps somewhere there were erroneous materials. But we deleted them. Each news outlet publishes false content. This is completely normal. We deleted our mistakes. Likewise, the mass media corrects their texts. If 1-2 posts were objectively incorrect, then keep in mind that a total of about 12,000 posts were posted.

Examples of publications provided by the Popular Information outlet and verified by the editor from AIN.UA do indeed often contain false statements. Among these, for example, posts about Hillary Clinton. There were also posts that were used by the “Russian trolls” in the past.

Tkachenko says that there was no desire to offend someone’s feelings or instructions to follow orders. However, with the beginning of a political activity, they began facing problems anyway.

About a month ago, an American farm began to face issues. Facebook support began verifications. And those were not really verifications. At first, they blocked public pages, and then we would prove our own innocence. Honestly, we grew tired of taking photos of our passports and send them to moderators.

In the end, the verification went well. Tkachenko is confident that this is why the first reaction of Facebook to the request for blocking was negative. Then the social network told reporters that it did not find signs of misconduct:

I think that’s why Facebook reacted to the first request that way because before that they really didn’t find any violations.

Tkachenko is not going to abandon his assets. He will contact the moderators of Facebook and plans to defend the public pages. Although he recognizes that there is little chance of returning the assets:

I assess my chances of regaining access as zero to none. I buried this asset for myself. I understand that Facebook was forced to do it amid a public outcry. But it’s funny that after the publication of the whole story the number of subscribers to I Love America didn’t drop – people even continued to sign up and some sent greetings to Ukraine.

Three administrators are currently unemployed. The company’s work continues as before, with an emphasis on social services. 

What was before and how much it was possible to earn from that

On the eve of the 2016 U.S. elections, a similar story developed in Macedonia. Hundreds of viral public pages with manipulative content were managed from the local town of Veles, campaigning in favor of Donald Trump. They would redirect the traffic to websites that earned from ads.

At first, it was believed that the Macedonians only want to earn on attention to the elections. This version was published by Deutsche Welle in 2016. Here is a quote from one of the participants:

I needed something viral that people like to read, something of great interest in America. I’ve been following politics in the U.S. for 6 years and I saw an opportunity to make money.

Later, BuzzFeed News and international investigators pointed out other options. They established a connection between the Russian “troll factory” and Macedonian networks.

In 2015, shortly before the registration of the first Balkan sites, Russian Anna Bogacheva visited Macedonia. She is on the list of 13 Russians whom Special Prosecutor Robert Mueller accused of interfering in the 2016 U.S. elections.

The report, prepared by Global Disinformation, estimated the annual revenue from advertising on extremist and disinformation sites at $235 million.