What began as a promising venture to create a cutting-edge “bank for the blockchain era” quickly turned into a financial scandal as the founders of Bankera appear to have used their ICO funds for personal luxury properties and questionable financial practices. Bankera’s bold promises of revolutionizing the banking world through cryptocurrency ended in a collapse, leaving investors in the dust while the co-founders seemingly lined their pockets, using funds raised under the guise of innovation for their own enrichment. This case raises alarms about the use of cryptocurrency projects for financial manipulation, fraud, and the potential for large-scale money laundering.

Bankera ICO: A Fraudulent Scheme in the Name of Blockchain Banking

The rise of cryptocurrencies and ICOs in 2017 and 2018 led to an influx of excitement and speculation, with many companies rushing to raise funds through token sales. Bankera, a Lithuanian start-up, was one of those companies, aiming to build a revolutionary digital bank powered by blockchain technology. With promises to disrupt traditional banking, Bankera launched its ICO in August 2017. The project quickly gained traction, raising over 100 million euros from more than 100,000 investors.

The founders of Bankera, Vytautas Karalevičius, Justas Dobiliauskas, and Mantas Mockevičius, promised investors that the raised funds would be used to create a digital banking institution that would rival traditional banks, offering a wide range of financial services for the cryptocurrency community. The concept seemed viable, especially with their stated goal of acquiring a European Union banking license and offering secure, fast, and efficient financial services. The company claimed that BNK tokens—purchased during the ICO—would entitle investors to regular payouts based on the profits from transactions involving the Bankera platform.

At first glance, everything seemed legitimate. Investors were even promised weekly payouts generated from the fees Bankera collected. These payouts were to be distributed proportionally to BNK token holders based on the number of tokens they held. As the ICO ended, excitement about the project was palpable, and investors believed they were about to witness the emergence of the next big financial institution.

However, things soon began to unravel. Despite raising tens of millions of euros, Bankera failed to deliver on its promise of obtaining an EU banking license. Over time, the value of the BNK token collapsed, and the expected weekly payouts were significantly reduced. In fact, the revenue-sharing scheme was eventually halted altogether in 2022. The real story, however, lies in the financial maneuvering behind the scenes, where the founders of Bankera appear to have diverted substantial portions of the ICO funds for personal gain.

A Deeper Look at Bankera’s Financial Tactics

In the years following the ICO, a deeper investigation uncovered disturbing financial transactions that strongly suggest the mismanagement, and possibly misappropriation, of investor funds. Over 45 million euros were transferred from Bankera-related companies to a bank located thousands of miles away in Vanuatu—a Pacific island nation known for its relaxed banking regulations and secretive financial environment. The bank, Pacific Private Bank (PPB), had been acquired by Bankera’s three co-founders just before the ICO concluded.

The transfer of funds to PPB is particularly troubling because shortly after this money landed in the Vanuatu bank, loans were granted to companies that were also owned by the three founders of Bankera. These loans were used to acquire luxury properties in high-profile locations, including a villa on the French Riviera and several upscale properties in Lithuania. It appears that the founders used the ICO funds as a personal piggy bank, taking advantage of the unregulated banking environment in Vanuatu to launder the funds through property deals.

Even more alarmingly, millions of euros were also loaned directly to the founders themselves. These loans were often marked as being for “personal use” and were secured against companies they controlled, which were also involved in the ICO. Such back-to-back loans, where the borrowed funds are immediately used to repay earlier loans, are commonly used to conceal the true purpose of the money and create the illusion of legitimate transactions.

These practices raise significant concerns about potential money laundering and fraud. The use of ICO funds for personal real estate investments directly contradicts the promises made to investors that their money would be used to create a digital banking platform. In essence, the founders seem to have diverted the funds into their own pockets, undermining the integrity of the entire ICO.

Kathryn Westmore, a financial crime policy expert at the Royal United Services Institute (RUSI), noted that the apparent diversion of ICO funds for personal gain casts serious doubt on the legitimacy of the Bankera project. “To extract funds and seemingly use them to finance personal spending raises suspicions that investors have been misled,” Westmore said. “This looks fundamentally like misrepresentation of what the funds were supposed to be used for, and it raises the question of whether this was a fraud.”

Unmasking the Bankera Ecosystem: A Network of Financial Entities

One of the most troubling aspects of the investigation is the complex network of financial entities tied to Bankera, which has made it more difficult for regulators and investigators to trace the movement of funds. The companies involved in the Bankera project, which were part of what has been described as the “Bankera ecosystem,” were spread across multiple jurisdictions, including Lithuania, the British Virgin Islands, and Vanuatu. Key players in this ecosystem included Pervesk UAB, Spectro Finance UAB, and Finalify Ltd., all of which had a direct role in managing ICO proceeds and facilitating transactions.

Spectro Finance UAB, a company registered in Lithuania, was responsible for operating an online platform where users could purchase Bankera’s BNK tokens. Pervesk UAB, another Lithuanian company, handled the proceeds from the ICO and managed the wallets for token holders. These entities, along with Finalify Ltd. (registered in the British Virgin Islands), were used to funnel ICO funds through various accounts and across international borders. The funds were then used to back loans that financed the founders’ real estate purchases and business dealings.

Leaked documents reveal how funds from the ICO were transferred between these companies, as well as to Pacific Private Bank. The opaque nature of these transactions, coupled with the use of multiple jurisdictions, makes it nearly impossible to track the true flow of money. The founders’ apparent use of complex financial structures and offshore accounts points to an intentional effort to obscure the destination of funds and avoid detection.

While Bankera UAB, a company within the ecosystem, has denied any fraudulent activity, the use of investor funds for real estate deals and personal loans directly contradicts the stated goals of the ICO. The company’s lawyers argued that funds were simply “moved as grants to multiple Bankera ecosystem companies,” but failed to clarify the true purpose of these transactions.

The Impact on Investors and Legal Ramifications

For investors, the collapse of the BNK token was devastating. The value of the token, once in the millions, fell to almost nothing, and the promised weekly payouts ceased. Many investors, including those who had purchased tokens expecting a steady income stream, found themselves with nothing to show for their investment.

The co-founders of Bankera, who once promised to bring an innovative financial institution to life, seemed to have prioritized their own financial gain over the interests of the investors who had trusted them. Investors tried to contact the founders, but their efforts were met with silence. The legal landscape for ICO investors is notoriously murky, with little recourse for those who have been defrauded in unregulated markets.

The actions of the Bankera co-founders illustrate the risks of investing in the largely unregulated cryptocurrency market. As Bankera’s story unfolds, it highlights the potential for financial manipulation and fraud in the world of ICOs, and the challenges investors face in seeking justice.

Kathryn Westmore of RUSI further pointed out that ICOs in the 2017-2018 period were part of a “wild west” phase of cryptocurrency, where oversight was scarce, and many investors were left vulnerable to exploitation. “People who lost money in ICOs like Bankera often struggle to find compensation because the sector remains largely unregulated,” she said.

The Role of Vanuatu and Weak Regulatory Oversight

One of the most significant issues uncovered in the investigation is the involvement of Pacific Private Bank (PPB) in Vanuatu, a jurisdiction known for its lax financial regulations. Vanuatu has long been criticized for serving as a haven for money laundering and tax avoidance, with its banking laws offering little transparency or accountability. The purchase of PPB by Bankera’s co-founders seemed to be a strategic move to take advantage of this relaxed regulatory environment.

Leaked records show that substantial sums of ICO funds were transferred to PPB accounts, and loans were made to companies controlled by the Bankera founders. The lack of transparency surrounding these transactions, coupled with Vanuatu’s banking secrecy laws, made it nearly impossible to fully uncover the scope of the financial activities involved. This raises questions about the adequacy of regulatory oversight in jurisdictions like Vanuatu, where such schemes can thrive without proper scrutiny.

Conclusion: Bankera’s Legacy of Deceit and Unanswered Questions

Bankera’s rise and fall serve as a stark warning to investors in the cryptocurrency space. What was marketed as an innovative venture to create a blockchain-based bank has instead turned into a cautionary tale of fraud, money laundering, and financial manipulation. The founders’ use of ICO funds for personal luxuries, including high-end properties, undermines the integrity of the project and calls into question whether the ICO was ever intended to benefit investors or was merely a front for a larger financial scheme.

The ongoing investigation into Bankera’s financial practices highlights the need for greater transparency and accountability in the cryptocurrency industry. As more information comes to light, the true extent of the founders’ misdeeds may be revealed. In the meantime, the case remains a powerful reminder of the risks involved in unregulated markets and the importance of due diligence for investors.

Related Links

• Reuters: Cryptocurrency and Fraud – A Growing Concern
• The Guardian: The Dark Side of ICOs
• Financial Times: How ICOs Can Lead to Fraud

Other FinCrime Central News Originated From the Organized Crime and Corruption Reporting Project

• Major AML Gaps at Swiss Bank Reyl Led FINMA to Do a Deep Dive Investigation
• JPMorgan’s Struggle with $270B Frozen by Russian Sanctions: A Deep Dive
• Belgium’s $270 Billion Sanctions Dilemma: The Unintended Consequences
• The Dark Side of Online Betting: Halil Falyali’s Alleged Money Laundering Empire

Source: OCCRP