Binance money processor Advcash looks like a Russian laundering operation
The collapse of Silvergate, Signature, and Silicon Valley Banks left the crypto industry reeling with countless Twitter Spaces framing the event as a deliberate “Operation Chokepoint 2.0.”
For Binance, the world’s biggest crypto exchange, it turned out to be a particularly tight situation, despite CEO Changpeng Zhao’s (CZ) cryptic assurance that “Binance do [sic] not have asset losses at Silvergate.”
Binance has spent much of its lifespan as a sort of pirate radio operation, never touching dry land — or at least a scrupulous jurisdiction. This, understandably, has taken something of a toll on its ability to exchange between fiat and crypto.
The Securities and Exchange Commission’s (SEC) case against Binance examined the corporate entities that CZ had used to manage its money in those now-failed banks, particularly Key Vision, Merit Peak, and Sigma Vision. Indeed, the SEC’s case clearly depended on revelations of those chains of ownership that only the banks’ failures would reveal.
The SEC had also cinched off Binance’s stablecoin by targeting Paxos, the New York-regulated company that had managed BNB and given it legitimacy.
For Binance, which has fought hard to establish those fuel lines of fiat funding, it’s back to square one.
By now, everyone knows that Binance is also scrambling to avoid or, more likely, brace for a legal hit from the Department of Justice (DoJ). Executives are scurrying to leave what looks like a sinking ship.
But what nobody knows is what those ‘payments processors’ do. This is by design.
Here’s Protos’ deep dive into one.
Intro to Advcash
Advcash may just be the biggest crypto company you’ve never heard of.
Total volumes are impossible to determine without either transparency or legal force majeure. After reaching out to several employees, the CEO, and several former owners of Advcash, Protos received one response via email from somebody calling themselves “Andrew K.”
“I think it’s pretty clear that you are yet another journalist on a mission to accuse us of various things, so helping you with it doesn’t really make a lot of sense,” wrote Andrew K.
Protos sadly lacks power of subpoena. But based on the information that’s available, the operation is a veritable parade of money laundering red flags — from its thinly disguised origins in Russia and links to the government, to its acceptance of anonymous cash deposits worldwide and its ghost staff.
It is, in other words, a crypto payments processor. There are forms of payments processing of greater or lesser legitimacy. Payments processors like Advcash play a central role in the crypto economy, but that role demands anonymity relative to the public companies they serve.
In one email exchange, the SEC questioned Binance about the role of such processors. The response was revealing:
“Payment processors have relationships with various bank partners. The bank partners maintain bank accounts for the payment processors, and the assets of the payment processor’s customers are maintained in these accounts (i.e., the assets BAM or its customer sends to a payment processor are deposited with a banking partner). These types of arrangements are commonly referred to as ‘bank-fintech partnerships.’ i.e., they set up bank accounts the company themselves can’t get.”
In other words, a bank that wouldn’t onboard a client with a familiar name like Binance is tricked into doing so by a third party with an unknown name, much as CZ kept a galaxy of accounts at Silvergate and Signature under his control with plausible deniability thanks to LLCs nobody had heard of.
Read more: Crypto banking giant Silvergate is no more following NYSE delisting
Who does Advcash work with?
While Advcash may be something of an unknown, its client list is certainly more familiar — and extensive. The firm has advertised Binance, Huobi, Kucoin, OKex, and Kraken as partner firms, and all of them apart from Kraken have released public statements confirming those relationships.
Representatives for Kraken haven’t yet responded to a request for confirmation or denial of a business relationship.
Since Protos began its investigation and contacted the relevant firms, the headlining exchanges have moved down Advcash’s home page. None have responded to requests for comment.
Bitcoin wallets that Protos has identified as under Advcash’s control have also sent funds to Coinbase and Bitfinex wallets.
In addition to familiar global names, Advcash provides services to the heavy hitters of Eastern Europe, like EXMO and WhiteBit, who somehow continue to offer services in hryvnya despite the National Bank of Ukraine barring crypto-to-hryvnya conversion as part of wartime capital controls.
The relationship to Binance is, these days, particularly special, as Advcash offers crypto services on its platform by linking with Binance accounts.
Analytics from Similarweb show that two domains associated with Binance are the most commonly visited sites by visitors to Advcash.
Binance, for its part, reciprocates, advising users to go to Advcash as a way of getting fiat currency out of the crypto exchange. And the SEC has taken notice, including a screenshot of this guidance in the commission’s almanac of evidence in its case against Binance.
Where is Advcash based?
Advcash’s official corporate registration is in Belize, but there’s no reason to believe that the firm has any proper base there.
Indeed, the bulk of its business operations are in the former Soviet Union. Data from SimilarWeb shows Russia, Venezuela, Ukraine, Israel, and Lithuania as the biggest contributors to Advcash’s site traffic. A quick scan of LinkedIn also shows the vast majority of declared employees located in Russia and Ukraine.
The number is, however, very small. This could be due to the firm’s overall policy of opacity. It could also be due to LinkedIn being blocked by the Roskomnadzor, the Russian internet censorship agency.
An older version of Advcash’s site includes a helpline number with a Russian area code. It was ultimately replaced by a line with a Belizean number — but with operational hours that line up with the Moscow Standard Time work day, which is nine hours off from Belize.
The website no longer advertises helplines. Both old numbers were unresponsive when Protos tried them.
A major benefit of Belizean registration is that the country’s corporate registry includes almost no identifying information about the firm beyond its existence. Similarly, the firm’s license with the Belize Financial Services Commission, which registers money transmitters, features almost no information.
This is one of many reasons that Belize remains on the US State Department’s list of major money laundering jurisdictions.
Despite the absence of any firm resembling Advcash in name in the Russian corporate registry, older versions of the Advcash site were available and advertised relationships with major Russian banks. Its laundry list of partners included online-based Yandex Money and PrivatBank, and traditional giants AlfaBank and Sberbank, which fell under US sanctions last April.
Advcash’s early linkages to the crypto world (seen through old Russian guides on VKontakte) were almost exclusively Russian or Chinese payments services. Notably, those included BTC-e, the crypto exchange that was revealed to be a money laundering organization.
BTC-e CEO Aleksandr Vinnik is currently sitting in jail following a lengthy extradition battle between Russia and the US. He’s reportedly angling to be included in a prisoner swap with jailed Wall Street Journal reporter Evan Gershkovich.
Old Russian-language video tutorials on VKontakte show that Advcash continued serving BTC-e well after Vinnik’s original arrest and continued working with successor exchange, WEX, until that too fell apart upon revelations that it was helping fund Russia-backed militants in Eastern Ukraine. It also worked with the Russian FSB itself.
Read more: US wins extradition war for Russian crypto exchange operator Alexander Vinnik
What is Advcash?
Advcash says it doesn’t operate in the US but its official CEO, Yaacov Bitton, seems to hail from the suburbs of Columbus, Ohio and lives in Florida. Bitton didn’t respond to multiple requests for comment. Property records show Bitton as owning various homes in Miami-Dade and Seminole Counties up until around the time Advcash launched. He got divorced in Miami-Dade County in 2015.
Bitton got his start in the check cashing and payday loan business right out of college. In 2001, he alongside three relatives also working in finance became an agent on the Ohio-registered and Florida-operational World Cash Net, Inc.
Despite Yaacov Bitton’s largely offline existence, old tweets find him signing on as an adviser to NVB Channel, a Moscow-based pump-and-dump scheme, and asking whether the ICO for Bitconnect would be open for US citizens — the very day that massive Ponzi scheme collapsed. Its founder is now facing charges from the DoJ.
Protos has identified an extensive network of additional associated corporate registrations despite this opacity.
Advanced Cash Ltd. was registered in the United Kingdom until 2020. Adv Services LLC was formed in Washington State on August 29, 2011. The firm held a Washington State money transmitter license from August 2012 through July 2020 before being dissolved.
More recently, the same controllers are launching a crypto wallet under the name Adv2 via a Canadian entity by the name of Payean Finance Inc., which was registered at the end of 2021.
One registration in Gibraltar also remains active.
Beneficial owners (those with ultimate control) of this network were, until recently, Russian nationals, Artem Valerievich Abramov and Artem Sergeevich Shulepov. Abramov and Bitton were both authorized persons for a Florida LLC by the name of Adv Services until they withdrew its registration in 2020. Those documents give Abramov a Seattle address, but it’s clearly not a residence.
Early versions of Advcash’s Maltese corporate registration appeared in the Paradise Papers, a mass leak of data from offshore law firm Appleby. The firm was registered in Malta in January 2017. In early 2018, Binance also relocated its headquarters to the island, looking to get a bank account that had eluded it in Japan.
Shortly after that, mass reforms swept the country causing Binance to leave the island. However, it remains a hub for the firm’s shady activity within the EU. Advcash Ltd. retained a legal entity there until 2023.
Abramov and Shulepov have operated a number of other, seemingly unrelated companies over the years. Perhaps most strikingly, Abramov seems to have been a contractor for the Russian government, doing over $1 million in business for it.
What does it do?
In the case of BTC-e, the DoJ’s indictment of Vinnik makes the point that users couldn’t fund their accounts on BTC-e directly in fiat and instead had to wire to shells and affiliates. The playbook for Advcash seems similar.
The Advcash system is guarded by some preliminary KYC. Verified accounts are advertised for sale throughout hacker forums at a rate between $80-180, depending on location. Ukrainian accounts are slightly pricier than Russian but are still significantly cheaper than those in the European Union.
Advcash also has its own native ‘advcash,’ which resembles a stablecoin but has no public ledger whatsoever and seems to be just a mark in an internal log. “We do not have a blockchain. I am unable to disclose any figures,” Andrew K. told Protos in an email.
It resembles what appears in the DoJ indictment of BTC-e. In addition to the $4 billion worth of bitcoin it had identified in the exchange, the prosecutors noted “well over a billion dollars’ worth of what is known as ‘BTC-e code.’ BTC-e code enabled a BTC-e user to send and/or receive fiat currencies and digital currencies to other BTC-e users.”
When an exchange goes down those deposits go ‘poof.’
Also concerningly, Advcash offers cash deposits at undisclosed locations throughout the former USSR, China, Macau, Southeast Asia, the United Arab Emirates, Israel, and a host of other traditional offshore locations. Protos contacted the Telegram account listed on Advcash’s site about setting up such a drop in Ukraine.
The operator switched responses from English to Russian and said that such deposits begin at $20,000, with no other currencies welcome. When asked about necessary documents for identification, the respondent said, “You don’t need any documents.” The location was to be determined.
Andrew K. identified these as third-party services, despite being listed on the Advcash platform and running off of Telegram channels that include variations on it in their name.
The significance of this all happening in Russia and the former USSR is that Russia’s payment providers don’t care who they service, even the more legitimate-seeming services. Hydra offered cashouts via Yandex and Qiwi Pay — well-respected local payment services — as well as more traditional banks.
Advcash does the same.
As one review from a Russian tech site from this past March put it, “In 2023, Advcash’s wallet helps Russians solve their financial questions within the framework of sanctions.”
What’s wrong with that?
Anonymity of third-party providers is a core part of their business models. Without overt clarity on their business, they can slip through nets of bank due diligence to serve customers the banks themselves wouldn’t allow.
The crypto industry is inclined to take corporate opacity at face value, particularly as long as the money keeps flowing.
This has, however, bitten the crypto industry in the ass repeatedly. The most famous example of such a dirty payment processor was Crypto Capital Corp (CCC), the Panamanian processor for BitFinex, as well as a host of drug cartels.
A government seizure of CCC’s assets precipitated Bitfinex’s misappropriation of assets from its sister company, Tether.
Read more: The rise and fall of Crypto Capital Corp, crypto’s premiere shadow bank
For Binance, this is hardly the first time it’s gotten in bed with a ‘payments processor’ that was in fact just a means of distancing from dirty money. Binance was, for example, the largest counterparty for Bitzlato, the Moscow-based exchange that the US Treasury sanctioned back in January. Bitzlato’s second-largest counterparty was Hydra, the largest darknet marketplace in the world, and Russian Ponzi scheme Finiko, according to the US Financial Crimes Enforcement Network.
Despite massive spending on onboarding compliance officers, Binance’s continued dependence on the Advcashs of the world is proof positive that the firm has just become adept at delegating and outsourcing its shadier dealings.
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