The beautiful story about “fan favorite” Alexei Navalny’s popular financial support turned out to be an established myth covering the secret financing. As Marilyn Monroe used to say, diamonds are a girl’s best friend. Well, it appears bitcoins are Navalny’s best friends and supporters.
The Federal investigation agency FLB.ru arrived at this conclusion having examined the transaction history of Leonid Volkov’s personal bitcoin wallet 3QzYvaRFY6bakFBW4YBRrzmwzTnfZcaA6E which had been used since 13 December 2016 to collect “popular” donations, first to support “the campaign for the nomination of Alexei Navalny for president” and then “the electoral strike campaign to decrease the voter turnout at the March elections”.
THE MYTH ABOUT THE 500 RUBLES
Here is how Alexei Navalny struck our imagination. He declared that he had managed to collect 372 million 775 thousand rubles from his supporters in a year and a half, from December 2016 until March 2018 inclusive. Sounds like his purpose is making money rather than doing good. At the same time, he always emphasized the mass character of the crowdfunding in his messages:
“This is a completely unprecedented amount for Russian politics. While the median size of a donation has decreased two fold, the number of givers has become 7-8 times larger”.
“I thank you very much and bow down to each of the more than 140 thousand people that supported Alexei Navalny’s campaign in 2017 by donating their honestly earned and by no means excess money. … All this would not be possible without your donations – both the one-hundred-ruble and the ten-thousand -ruble ones”.
“The campaign for the admission of Alexei Navalny to the 2018 presidential elections in Russia operates solely on your donations. I bow down to each of the 34 thousand sponsors of the campaign, regardless of the size of your donation. Please continue your support”.
In 7 months we have collected 98 million rubles. You gave us this money, thank you very much. This campaign has more than 70 thousand donors. The median size of a donation is 500 rubles”.
“I can say for sure that the median payment was 500 rubles while the mean was around 1500 ruble s(the total number of payments being around 250 thousand), the number of unique donors most probably exceeded 100 thousand people”.
This is what Navalny and Volkov said during various stages of their political roadshow, stressing that they got their substantial popular support through small contributions from a large number of people (“100-ruble donations”, “500 rubles”, “by no means excess money”, “regardless of the size of your payment”).
In their reports where the main thing was neat infographics, Navalny and Volkov announced that “for the 16 months from 13 December 2016 (when Navalny announced his nomination) to 17 April 2018: 372 million 775 thousand rubles were collected. 367 million 975 thousand were spent. 80 headquarters in 65 regions. 350 employees. The maintenance of each headquarter required about 1.2 million during the period”.
That is, on average they spent 22 million 998 thousand rubles ($383 thousand) per month, which were donated every day by supporters regular as clockwork: mainly, as we remember according to the rally participants, schoolkids, students and office managers. Doesitsoundplausible?
In total, based on Navalny’s data, in 16 months this freedom-loving youth transferred funds in “500-1500-ruble transactions” in a number of ways:
Sberbank card to card transfers – 113 million 380 thousand rubles.
Wire transfers to Sberbank and Alfa-Bank accounts – 101 million 700 thousand rubles.
Bitcoin transfers – 91 million 200 thousand rubles.
PayPal transfers – 33 million 440 thousand rubles.
Alfa-Bank card to card transfers – 14 million 500 thousand rubles.
Yandex.Money transfers – 6 million 845 thousand rubles.
The devil is in the details, where “Bitcoin, the little Luxembourg devil” tamed by Leonid Volkov can be found, and if you are not aware of them this might seem impressive. In fact, all this “popular crowdfunding” was nothing more than a cover-up for the secret financing of Navalny’s campaign by western funds through the cryptocurrency platform Blockchain.com. However, bitcoins now continue to rain down in a turbo mode even after the presidential elections, but this will be discussed at the end of our investigation.
IT ALL STARTED WITH SMALL LIES
So, in the afternoon of 8 December 2016 at 16:44 Leonid Volkov opened his cryptocurrency account number 3QzYvaRFY6bakFBW4YBRrzmwzTnfZcaA6E (hereafter – A6E) on the large blockchain platform Blockchain.com, registered in Luxembourg, and made a verification transfer of 0.0096 BTC ($7.39, exchange rate 769.73) apparently from his own account number 1Bv37aavcuw4e8scwUznVPzETHTrKVADQQ.
And on 13 December when Navalny announced his nomination for presidency the first bitcoin donations started to pour down on the crypto-wallet A6E now made public. This was so successful that on 14 December Alexei Navalny published an optimistic post:
“Day One. I report.
14.12.2016: At the moment 3 million 530 thousand rubles from more than 2300 givers have been collected.
50% of the donations are made through Yandex.Money,
25% - through PayPal,
10% - in bitcoins (more than 100 people!)”.
It was this boastful comment – “more than 100 people!” - that caught my and FLB analyst Aleksandr Nevsky’s attention. Using the open access to the Blockchain.com platform in Russian, we decided to double-check Navalny’s report and examine Volkov’s account. (Unfortunately, we do not have access to Leonid Volkov’s accounts at PayPal, Yandex.Money, Sberbank and Alfa-Bank. However, some information was leaked from Alfa-Bank, but this will also be discussed later).
Them one y made sense. 5.715847 BTC ($4450 or 266 985 rubles at the exchange rate of USD 778.4 for 1 bitcoin) were indeed donated to Navalny on the first day of his campaign. The minimum transfer amounted to 0.0001 BTC ($0.08 or 4.67 rubles), the maximum – to 1.337 BTC ($1040 or 62 451 rubles). But the number of transfer transactions was only 62. That is, only 62 people, not “more than 100 people!” donated their money to him in bitcoins. Why did he need such a small lie and exaggeration?
The thing is, this point is crucial for Navalny and Volkov, as it wasimportant for them from the very beginningto blur the information in their already vague reports about the large amounts of money they received in bitcoins. So large that no one would believe they were “student” donations.
Here is a clear example of Navalny’s student support:
“I’m joining! I will donate 1000 rubles every month. Navalny is my president!”, - commented someone under the nickname Barnaul Cat below the appeal for donations on the second day of the campaign on 14 December 2016 at 14:16.
Together with Stanislavski and Nemirovich-Danchenko I believe this Barnaul Cat – he can afford to share a thousand per month.
Although the transaction of a strange “student”, who transferred 9.73652 bitcoins (at the rate of the day this was $7545 or 452 688 rubles) at once on 14 December 2016 at 20:12 raises concerns. You might think it is just a rich Navalny supporter. I admit this is possible in isolated cases. But how could you explain the fact that in the future, throughout the whole next 1,5 years of donation collection such large amounts in bitcoins were transferred to the “accountant” Volkov’s wallet on a regular basis on average every 9 days. Is it because the rich have their quirks, so they conspire to engage in philanthropy strictly every 9thday?
Just look at the way Navalny boasts in his report “Day One”:“In 24 hours we have understood that we will definitely be able to run and finance a real grass-roots campaign based on small contributions”.
It would be surprising if they failed to understand that. On 13 December 2016 Leonid Volkov received two “small contributions” each in the amount of 1 bitcoin ($778 or 46 709 rubles each) and one totaling 1.337 bitcoins ($1040 or 62 450 rubles). And on 14 December these wealthy “students” donated the already mentioned 9.73652 bitcoins ($7545 or 452 688 rubles) and 1.5 bitcoins ($1162 or 69 740 rubles). That is, large givers donated 14.57352 BTC totaling $11 304 or 678 298 rubles in the first two days. Based on month-end results (see Navalny’s “A small report and outline of plans” of 18 January 2017)those 5 large contributions are the ones that accounted for 62% of the total cash inflows.
The rest of the 202 small transactions during the period of December 2016 – January 2017 amounted to a total of 8.695195 BTC - $6953 or 417 213 rubles. Although how “small” were they? To simplify the analysis, we included all donations less than $500 (30 thousand rubles) in the category of small, “student” donations. It is doubtful that there are many schoolchildren, students and young managers that would transfer 6, 11, 14, 23, 26 thousand rubles of their “honestly earned and by no means excess money”. Especially in bitcoins.
SANTA CLAUS TO THE RESCUE
Let us now examine how things were going with Navalny’s collection of donations exactly a year later, during the pre-electoral January 2018. You might think that we choose this “dead” month intentionally, since people only come back to life in February after the long New Year holidays. But people doing politics have a different calendar. This is a busy season for them because of the nomination and registration of candidates for presidency, and for Navalny this was the beginning of “the voter strike” he proclaimed and the organization of his country-wide protest action.
What do we however see according to the transaction history of Leonid Volkov’s bitcoin account number A6E? Mass apathy. Only 7 incoming transactions during the month. Guys, wake up! Putin is coming! Grudinin is walking up your heels! Sobchak strives to get in power against the will of your boss! Navalny's Witnesses, why don’t you help Alexei Anatolyevich with your honestly earned bitcoins? Silence.
“As expected, in January cash inflows decreased as compared to December: from 40 million to 28 million rubles. We, in turn, reduced the wage fund by 20% and the amount of rent payments – by 10%”, - thoughtfully wrote Navalny in his January report. (I wonder how they managed to decrease the rent for their 80 headquarters in the regions, did they persuade the landlords? Did they fail to pay? But that’s just for the record).
Although everything is not that bad. First of all, one student eventually woke up from the New Year binge and transferred 0.00609 BTC ($92 or 5 527 rubles) to Volkov’s account on 10 January 2018 at 9 p.m. And, secondly, as always, Santa Claus saved the day. Unknown patrons (who had already finished celebrating Christmas at the end of December) came to the aid of Navalny and bailed out the budget. They transferred 10.7 BTC in 6 transactions. And the bitcoin exchange rate in January 2018, I’ve got to tell you, ranged between $10184 and $15126. This means that $127.7 thousand or 7.6 million rubles were donated in total.
Specifically, 2.2 bitcoins amounting to $30 608 (1 million 836 thousand rubles) were transferred on 12 January 2018 at 2 p.m. 2.8 bitcoins amounting to $31 590 (1 million 895 thousand rubles) – on 24 January. 2.6 bitcoins amounting to $30 590 (1 million 835 thousand rubles) – on 28 January, and there were another three transactions amounting to $19 thousand, $9 thousand and $6 thousand. Now that’s student-like! This doesn’t compare favorably with the Barnaul Cat and his thousand rubles.
Thus, six wealthy donors did the January bitcoin till 99 percent.
That’s right, Navalny lectured his team at the very beginning of the campaign in a Lenin fashion: “We have to keep in mind that we have more than a year ahead of us. This is a marathon, not a sprint. We know how to collect a lot and fast, we have to learn how to collect a lot and over a long period”. The six New Year gifts from Santa demonstrated they had succeeded to learn it.
LARGE TRANSACTIONS ACCOUNT FOR 94% OF ALL BITCOIN TRANSFERS RECEIVED
And after all it feels like the two New Year examples of January 2017 and 2018 do not seem illustrative to you. This is why we obviously analyzed the whole pre-electoral transaction history of Leonid Volkov’s account number A6E from 13 December 2016 until 31 March 2018. As Navalny likes to say: “It was a huge amount of work and at first we weren’t even sure we could manage to do it by our own means. Butwedidit”.
In the 16 months of Navalny’s “presidential” campaign 1714 incoming transactions were registered in Volkov’s account number 3QzYvaRFY6bakFBW4YBRrzmwzTnfZcaA6E. 312.182501 BTC were received. There were 85 outgoing transactions, almost everything was withdrawn – 312.166258 BTC. In total as at 31 March 2018 Leonid Volkov had withdrawn (cashed) 99.99% of the received amount. For the full reporting period, after the conversion of the bitcoins using the average USD exchange rate ($5115.62 for 1 BTC), $1.6 million (USD 1 597 013.29) or 95.8 million rubles (RUB 95 820 797) had been deposited into Volkov’s account.
And now the main point: 94% or $1.5 million (USD 1 496 982) were large transfers. And student donations accounted for only 6%or $100 thousand (USD 100 031) of the total amount.
How we calculated the USD exchange rate for the fluctuating bitcoin
In order to enhance objectivity, we calculated the mean value of the BTC/USD exchange rate for the whole period under review due to significant fluctuations of the rate. We used this average exchange rate to compare data for the whole period and in the case of specific examples we always used the real BTC/USD exchange rate for each date to show you what you would call the “truth for a particular day” rather than the “average profitability” of Leonid Volkov’s bitcoin wallet.
According to Blockchain.com’s website, the BTC/USD exchange rate for the period of 13.12.2016 – 31.03.2018 ranged between a minimum of $774.9 for 1 BTC (14.12.2016) and a maximum of $19 498.68 for 1 BTC (16.12.2017). You can download all the historic values of the exchange rate for all of the 474 days under review, which makes it possible to calculate the average value of the rate for the whole period. The average value we eventually got for the BTC/USD exchange rate during Navalny’s campaign was $5 115.62 for 1 bitcoin. The USD/RUB exchange rate for the period from December 2016 to April 2018 is estimated to be 60 rubles for 1 dollar. (By the way, we were basically right, compare our figures with Volkov’s reports).
The minimal amount received in this period was registered on 15 December 2016 at 14:22 and was equal to 0.000006 BTC ($0.05 or 0.28 rubles, rate of the day – 776.75). The maximum one-time incoming donation amounted to 25 BTC (6 April 2017 at 09:10). At the rate of the day ($1 196.31 for 1 BTC) this was USD 29 908 or 1 794 461 rubles.
STUDENT DONATIONS ACCOUNTED FOR ONLY 6%
As we have already mentioned, we decided all the donations transferred to Volkov’s A6E account amounting to less than $500 (the average wage in Russia is 30 000 rubles) be “small” donations. Accordingly, all bitcoin contributions converted at the average rate ($5115.62) less than $500 were considered “small” and those exceeding $500 – “large”.
For the reporting period out of the 1714 transactions there were 1463 such “small” donations (85% of the total number of transactions). At the same time the amount of money contributed by all those donations was only equal to 19.55397272 BTC. At the average rate this was about $100 thousand (USD 100 031) or about 6 million rubles (RUB 6 001 865).
Therefore, in 16 months these “small” student donations accounted for only 6% of the total amount of the bitcoin contributions Navalny and Volkov received.
LARGE TRANSACTION PATTERN: ONCE EVERY 9 DAYS
While for the same period there were only 251 “large” transactions (15% of the total number of incoming transactions). The amount of money contributed by these large “charity” donations to Volkov’s account for the reporting period was, however, equal to 292.6285283 BTC or 94%of the total value of the donations. This is $1.5 million (USD1495982) oralmost 90 million rubles (RUB 89 818 932).
Thus, the figures demonstrate that the overwhelming majority of the money transferred to Leonid Volkov’s account was donated by unknown large givers. The average large donation was 1.165851 BTC ($5 964 or 357 844 rubles).
For the whole period (474 days) such large “gifts” – 251 transactions exceeding $500 or 30 000 rubles – were received on average every other day. It should be reminded that we calculated all cash inflows using the average BTC/USD rate of 5115.62. There were also very large donations exceeding 1 million rubles. We counted 19 such “gifts”. Additionally, 31 transfers ranging between 500 thousand rubles and 1 million rubles were discovered.
That is, the just 50 largest donations exceeding half a million rubles accounted for almost 70% of the total cash inflows. Such very large transfers were received on average once every 9 days.
The average large donation from these anonymous givers (251 transactions) was equal to 1.165851 BTC. The dollar amount of the average large transaction was about $6 thousand (USD 5964). Such a transaction would lead to an average inflow of about 360 thousand rubles (RUB 357 844).
The ratio between large and small donations
For illustrative purposes we present in the summary table and in the diagram the rounded total figures of the ratio between large and small donations to Volkov’s account number 3QzYvaRFY6bakFBW4YBRrzmwzTnfZcaA6E for the period between 13 December 2016 and 31 March 2018.
SCROOGE MCDUCK KNEW AND EXPECTED IT. WITHDREW AND CASHED INSTANTLY
In total from 13 December 2016 to 31 March 2018 Navalny’s “accountant” withdrew money from the publicly available bitcoin account 85 times. On average the withdrawals took place every 6 days or about 1-2 times a week.
Based on the transaction history of the A6E wallet we can accurately track what its owner was doing on a particular date and hour during these 1,5 years: Leonid Volkov watched his bitcoins closely, just like Scrooge McDuck.
For example, Volkov received the largest “gift” for the entire period under review on 6 April 2017 at 09:10 amounting to 25 BTC. At the rate of the day (On 06.04.2017 at 00:00 the exchange rate was $1196.31 for 1 BTC) this was almost $30 thousand (USD 29 908) or 1 794 462 rubles.
A little less than 7 hours later, at 16:03 the same day Volkov withdraws 31.930256 BTC. On that day the “fighters against corruption” cashed almost $40 thousand (USD 38 198) or 2.3 million rubles (RUB 2 291 905) at once. This was the largest cashing of bitcoins during the whole pre-electoral campaign (almost 32 BTC).
Navalny: “Where is Volkov?”
Secretary: “Volkov is withdrawing money again”.
THE MARCH HARE’S LAST CHORD
Just look at this entertaining story. It’s 26 March 2018. Both the presidential campaign and Navalny’s anti-presidential campaign have come to an end. There is a relative calm on Navalny supporters’ sites and blogs. At least there is no one annoyingly repeating “Support Navalny’s team” every day. Moreover, Alexei Navalny himself has decided to take a break (On 30 March he left for Germany with his spouse).ButNavalny’ssupportersneversleep!
On 26 March at 16:20 another donation was registered in Leonid Volkov’s bitcoin account number A6E and was equal to 9.987942 BTC. This is, by the way, $81.9 thousand (USD 81 876) or almost 5 million rubles (RUB 4 912 598). And Navalny’s loyal Scrooge McDuck is, as always, on his guard. On the same day, at 19:05 Volkov withdrew this amount and some other small bites – 10.00290191 BTC or almost $100 thousand (According to the website “Blockchain.com”, the rate of the day was $8197.55 for 1 BTC).
It is worth mentioning that Volkov clearly knew and was expecting it – he withdrew the donation he obviously didn’t receive from a “student” just 2,5 hours after the cash inflow. Maybe Navalny rushed him as he was urgently called away on business with his wife…
Here is another interesting point. Analyzing the particularities of the large donations to Leonid Volkov’s wallet number A6E for the period from 13 December 2016 to 31 March 2018 we paid special attention to the sponsor accounts where the donations came from. And we were right in our expectations.
Volkov received the final 5 million rubles (9.987942 BTC) on 26 March from the private account number 36SpU2FQSWi63XgqAUQoN4SKRTDeS8gjx4. Together with the FLB analyst Alexander Nevsky we decided to continue to monitor this “March Hare” sponsor’s activity as well as Leonid Volkov’s wallet number A6E’s post-electoral transaction history. It turned out that this was only the beginning! Apparently, this was by no means the suddenly awakened sponsor’s last chord. This was the start of a new stage in the secret financing of Navalny’s political activities through bitcoin platforms.
In particular, slightly looking ahead, we add that during the months of April, May, June and July this “March Hare” transferred 43.087942 BTC to Navalny and Volkov in the total amount of $333 931 or 20 million rubles.
1.4 MILLION DOLLARS IN 244 DAYS
Even after the presidential elections there are still massive levels of activity in Leonid Volkov’s Luxembourg wallet number A6E. Although now, in contrast to the previous stage, the guys stopped conspiring and hiding behind the “popular crowdfunding” motto – either since they decided to just relax or, most likely, out of contempt for the people around them.
Here are, say, six of the largest September transfers.
- On 1 September 2018 at 16:09 Navalny’s “accountant” received a gift in the amount of 5.7996 BTC or $41.2 thousand (USD 41 183) (rate of the day: 7100.95). This is almost 3 million rubles (RUB 2 802 261). (The official USD/RUB rate of the day was 68.04).
- On 5 September at 09:10, 12.41998 BTC or almost $90 thousand (USD 88 344) (rate of the day: 7113.07) were donated. This is more than 6 million rubles (RUB 6 031 582 at the USD/RUB rate of 68.27).
- On 9 September at 07:56, 6.1996 BTC or almost $40 thousand (USD 38 973) (rate of the day: 6286). This is, once again, almost 3 million rubles (RUB 2 690 274 at the USD/RUB rate of 69.03).
- On 25 September at 07:50 an inflow of 2.9996 BTC ($19 235 the BTC/USD rate of 6412.46) was registered in Volkov’s account. This is more than a million rubles (RUB 1 272 564 at the USD/RUB rate of 66.16).
And 7 hours later, at 15:41 these $20 thousand were already withdrawn and cashed. And this might even have been done by Volkov’s trustee rather than himself, since Leonid is, as we all know, going through “revolutionary” education at Yale University.
- On 27 September there were two extra-large inflows. In the morning, at 09:42 anonymous patrons transferred 3 BTC to Volkov’s account. This is almost $20 thousand (USD 19 606, rate of the day: 6535.48) or almost 1.3 million rubles (RUB 1 289 289 at the USD/RUB rate of 65.76).
In the afternoon of 27 September there was another large transfer. At 16:02 the “March Hare” returned from vacation. He transferred the generous amount of 8.75 BTC from the same account number 36SpU2FQSWi63XgqAUQoN4SKRTDeS8gjx4 to Volkov’s bitcoin wallet. This was equal to almost $60 thousand (USD 57 185) at the rate of the day or about 4 million rubles (RUB 3 760 427). The whole amount was withdrawn just 2 hours later. The guys seem to have conspiracy issues.
39.168775 BTC or $264.5 thousand (USD 264 527) were received in just the six large September transactions. This is about 18 million rubles (RUB 17 846 397). That is, when Alexei Navalny was imprisoned for 30 days prior to the unsanctioned protests on the voting day, and then for another 20 days, he already knew that he had gone to prison for a reason. This is the case when “you sit back (in jail) while the money keeps flowing in”.
By the way, on 14 October, the day when A. Navalny was released from the remand center, at 11:48 by a strange “coincidence” a very large “incentive bonus” equal to 14.7 BTC, which is almost $100 thousand (USD 92.3 thousand or 6.2 million rubles at the rate of the day), was transferred to their account. The whole amount was withdrawn just 53 minutes later, at 12:41 on the same day.
In total, after the presidential elections, from 1 April 2018 to 30 November 2018, 207.006426 BTC were transferred to the bitcoin account number A6E. This is almost $1.4 million (USD 1 382 490) or about 90 million rubles (RUB 89 185 860).
According to the website “Blockchain.com” from April to the end of November 2018 the BTC/USD exchange rate at 3 a.m. ranged between a minimum of $3 823.51 (25.11.2018) and a maximum of $9 803.31 (05.05.2018). That is why we bothered to recalculate every incoming transaction using the real BTC/USD exchange rate for each particular day and the real USD/RUB rate of the Central Bank of Russia. I have to admit the guys are doing well. In just eight months Volkov and Navalny collected $1.4 million in bitcoins. It should be reminded that before that, in 1.5 years (474 days) the “fighters against corruption” received $1.6 million, but here in just 244 days they managed to collect about 7/8 of that sum (87.5%). This means the fighters against corruption managed to accumulate a whopping $3 million solely in bitcoin transactions.
Out of the 147 incoming transactions 38 were large and contributed 99.6% of the total donated value (206.2751857 BTC). The maximum amount for a single bitcoin transaction was 19.94337442 BTC, which is almost $100 thousand (USD 90 416) or about 6 million rubles (RUB 5 930 182).
There were only 109 small donations from April to the end of November 2018. In total they accounted for an inflow of 0.731240 BTC (0.4%). This is $4.5 thousand (USD 4 580) or less than 300 thousand rubles (RUB 296 194). The minimum amount of a transaction for the period was 0.000010 BTC ($0.06 or 4.13 rubles), which is virtually nothing.
Unknown wealthy “students”, by contrast, warm our heart: on 15 July they donated $93 thousand, on 14 October they transferred $92 thousand, On 19 June the amount was $91 thousand, on 21 November $90.4 thousand were transferred, on 14 August the “students” donated $90 thousand, on 5 September they donated $88 thousand, on 2 May the amount was $83 thousand, while on 4 June and 4 July they donated $81 thousand and $80 thousand, respectively. (The last one is, by the way, the efforts of the “March Hare” who in fact spared no expense in September and transferred another $60 thousand on 27.09.2018 at 16:02). Having such supporters, you can definitely live and work for the benefit of the “Beautiful Russia of the Future” as understood by Alexei Navalny, graduate of the Yale training school for “young color revolution leaders”, and Leonid Volkov, who recently startedstudyingat this very school. (See FLB Investigation “Leonid Volkov to study at the U.S. school for color revolutions”).
Yes, you have to keep in mind that the average donation for the period from 1 April 2018 to the end of November 2018 (244 days) was 1.408207 BTC. Using an average BTC/USD rate of $6 654 for 1 BTC, we see that this amounts to more than $9 thousand (USD 9 371) or almost 610 thousand rubles (RUB 609 258 at the average USD/RUB exchange rate for the period of 65.02). We decided the help must be coming from “Yale students”.
WHERE ARE THE BITCOINS FROM? OF COURSE IT’S LUXEMBOURG
As per Volkov’s conversation with a reader in the comment section on the website on 11 January 2018 at 00:09:
“Yes, of course, cryptocurrency will now be actively used for suspicious money laundering activities”.
Leonid Volkov maintains a good relationship with his ex-wife Natalia Gredina. Firstly, they have two children: a son named Boris (birth year: 2009) and a daughter named Margarita (birth year: 2012). Secondly, they have a common house near Luxembourg (Luxemburg-8265, Mamer, 31, Rue des Prés) which they bought in August 2014 for 900 thousand euro. Thirdly, they have common business. Natalia Gredina introduced her ex to the world of blockchain.
Volkov spent some time in Luxembourg, worked at the firm of his friends from the Moscow State Technical University named “Next Stop Ventures” (see FLB investigation “The Caymans of the Opposition”), divorced and returned to Moscow, though now knowledgeable about the Mighty Bitcoin. Not coincidentally did he launch his “Society of Digital Defenders” project in Moscow in 2016.
The thing is, Volkov’s ex-wife works in the blockchain industry. At the moment, Natalia Gredina is a UX/UI designer at Luxembourg’s Bitbank “Bitvalley/Ibisa” (Bitvalley SARL, 20, rue de Bitbourg, L-1273 Luxembourg). It is also sometimes called “Bitvalley-Blockchain-Luxembourg” or “The Bitbank of Luxembourg”, or simply “Bitbank”.
SECRET FINANCING SCHEME: BITVALLEY–ADA–E-MFP–HIVOS–DDP
The firm “Bitvalley” is a crypto-hub which engages in the worldwide promotion of crypto-banking, blockchain technologies and operational business models for microenterprises from different countries based on cryptocurrencies. The firm, at which Natalia Gredina works, vaguely states its mission the following way: We are building a new decentralized economic model based on a blockchain strategy which introduces these new technologies into fields ready for transformation.
It is also indicated on the firm’s website that at the moment this bitbanking platform directly cooperates with its partner and sponsor, the Luxembourg NGO “ADA” («Appui au Développement Autonome», translated from French as “Support of Autonomous Development”). ADA specializes in the creation of NGO cells and networks supported by grants.
ADA, in turn, is a member of the Luxembourg association “The European Microfinance Platform/e-MFP” which joined the Hivos network in 2011.
Hivos exercises active political interventions in particular in the social environment of different countries by means of financing and supporting opposition NGOs with grants. Since 2013 Hivos has governed the Digital Defenders Partnership (DDP) which is under the aegis of the U.S. Department of State.
DDP’s motto is «Whatever states will do in attempt to curtail human rights online, they will fail». Frank William La Rue.
The Digital Defenders Partnership (DDP) was formed at the end of 2012 at the initiative of the Freedom Online Coalition (FOC) “to protect and advance internet freedom, and to keep the internet free from emerging threats, specifically in repressive and transitional environments”.
For example, in 2016 DDP spent a total of 127.9 million euro to support “digital defenders”. They provide cyber-activists with grants in an amount of up to 10 thousand euro. Opposition NGOs, media and human rights organizations may expect to get up to 50 thousand euro. Large digital human rights organizations united in a network have received “capacity building” grants ranging between 50 thousand and 100 thousand euro, and starting from the beginning of 2018 the size of such a targeted grant increased to 250 thousand euro.
The maximum processing time for each grant request at DDP is 2 weeks. Additionally, DDP has special emergency grants that are issued even faster. Grant support is provided for a period of 4 months but can be repeated. Ideally digital defenders in countries with a repressive internet environment may receive 250 thousand euro every 4 months, that is 750 thousand euro (up to 54 million rubles) per year.
And above all, it is indicated on DDP’s website that for security reasons they have ceased to disclose both the names of the grantees and the list of projects that received grants from DDP. This is done solely because all the digital defenders DDP supports live in countries where governments systematically repress them. Grant applications and letters can be sent in an encrypted form. According to DDP’s website: You can also send us encrypted emails, find our PGP keys here: Wieke’s key.
Well, do you now want to instantly give up everything and become a digital defender? Volkov discovered this feature as early as 2016. It’s no coincidence that, firstly, his “Society of Digital Defenders” (SDD) is governed by a pool of small organizations (recall the 250-thousand-euro grant), and, secondly Volkov knows perfectly well that besides the Digital Defenders Partnership there is also a Dutch NGO named Ranking Digital Rights Network/SRDRN, which finances a global network of digital defenders creating internet freedom rankings for their countries. This is why Volkov’s SDD publishes a such a ranking for Russia on a regular basis. By the way, in September he launched SDD’s “educational” Youtube channel in addition to its website. The first lesson is about blockings.
Four American organizations are listed among SRDRN’s general sponsors: the John D. and Catherine T. MacArthur Foundation, the Ford Foundation, Soros’ Open Society Foundation (which is included in the Russian Ministry of Justice’s list of undesirable organizations number 1778-r dated 01.12.2015) and this global project’s main public investor – the U.S. Department of State Bureau of Democracy, Human Rights, and Labor.
We assume that the bitcoin financing of Navalny’s organization was conducted for a year and a half and now continues exactly within these funds’ and NGOs’ program. Most likely, they have developed an “emergency” target program for Russia. That’s the kind of “March Hare” we’re dealing with.
LEONID VOLKOV: WE DO MAKE WITHDRAWALS BUT HAVEN’T FALLEN UNDER ARTICLE 115
Alright, you might say, “Yale students” made large transfers to Navalny and Volkov’s account number A6E amounting to $1.6 million in a year and a half, then another $1.4 million since April 2018 ($3 million in total). Buy how could you explain the fact that during the “presidential” campaign they received 113 million 380 thousand rubles of donations through Sberbank card to card transfers and 101 million 700 rubles through wire transfers to Sberbank and Alfa-Bank accounts?
Recall Volkov’s rhetoric confession: “Yes, of course, cryptocurrency will now be actively used for suspicious money laundering activities”.
And I am sure that Navalny and his consigliere Volkov widely used bitcoin transactions. The main point is that they could receive bitcoins from western funds not only in Volkov’s official account number A6E published for donation collection, which was necessary for “transparent reporting” purposes.
Leonid Volkov clearly had other secret bitcoin wallets. Don’t forget that this is blockchain, a sector basically uncontrolled by the government.
I wonder where Volkov and Anti-Сorruption Foundation employees got the millions of rubles they deposited into their account at Alfa-Bank. FLB wrote about this inJune:
The general sense of scam only increases when you start to examine documents with information about the sources of the Fifth Season of the Year Foundation’s funds. Thus, income bank records from Alfa-Bank appear in court proceedings related to the termination of the activities of Volkov’s foundation. From 3 May to 31 October 2017, 96.8 million rubles were deposited into the foundation’s current account. The strangest income sources are:
1) Leonid Volkov’s “voluntary contributions” in the amount of 47 million 525 thousand rubles.
2) The head of the “Anti-corruption Foundation” Roman Rubanov’s “voluntary contributions” in the amount of 4 million 25 thousand rubles.
3) Ruslan Shaveddinov’s “voluntary contributions” in the amount of 15 million 498 thousand rubles.
4) Anna Chekhovich’s “voluntary contributions” in the amount of 17 million 336 thousand rubles.
By the way, Shaveddinov and Chekhovich are not Navalny sect millionaires, they are regular Anti-corruption Foundation employees. Where did they get such an amount of money? (This is another topic and another proof that the stories full of pride about the tens of thousands of people donating funds to support Navalny’s “fight” (and an average donation of 500 rubles) are nothing more than a good-looking myth).
So now when we’ve figured out the bitcoin-technology behind the secret financing of Navalny’s campaign, the funding scheme looks relatively simple: Volkov received bitcoins in his disclosed wallet (A6E) and in secret bitcoin accounts, the bitcoins were cashed and then Navalny’s trusted employees deposited their “personal” voluntary contributions into Sberbank and Alfa-Bank accounts. This is how the Anti-corruption Foundation’s modest Anna Chekhovich managed to deposit 17 million rubles into the Alfa-Bank account.
By the way, the “cashing” of bitcoins is another broad subject. For now, we’ll just outline it with the confession Volkov himself made in the same conversation with a visitor of his website on 10 January 2018
Reader Sergei Kirichenko (at 13:56): “How do you exchange bitcoins to avoid trouble with monitoring and stuff?”
Volkov: “At localbitcoins, we have never had any problems.”
Sergei Kirichenko: “Do you also make withdrawals from localbitcoins to your bank account? I wonder how not to fall under Article 115.”
Leonid Volkov (at 14:34): “We do make withdrawals but haven’t fallen under Article 115.”
P.S. Today, on the day of the FLB publication (03.12.2018), the “March Hare” came alive again. At 07:55 he transferred 4.5 BTC from his account to Volkov’s wallet. This is $18.5 thousand or 1.2 million rubles. The secret financing of Navalny’s sect goes on.
The investigation was conducted by:
Sergey Sokolov and FLB analyst Alexander Nevsky
The editorial board of FLB would like to thank M. – a specialist in the cryptocurrency market – for guidance.