Allegations by Frederic Hubin Against CoinsPaid
In a recent LinkedIn post, Frederic Hubin, a former executive at CoinsPaid, made serious allegations against the Estonian-based cryptocurrency payment processor. Hubin directed his accusations towards the Estonian Financial Intelligence Unit (FIU), claiming that CoinsPaid was involved in facilitating fraudulent activities and illegal online gambling operations. As an insider who served on the management board from 2020 to 2023, Hubin’s assertions have raised significant concerns regarding the company’s practices and affiliations.
Key Allegations
Hubin’s allegations encompass several critical points:
Fraudulent Practices: Hubin accused CoinsPaid of enabling payments for illicit activities and urged the Estonian FIU to conduct an investigation into these claims.
Connections to Online Gambling: He highlighted the company’s ties to N1 Interactive Limited, which was fined €12.6 million by Dutch authorities in 2023 for engaging in illegal gambling activities.
Affiliations with Key Entities: Hubin specifically noted CoinsPaid’s connections to A.R. Merkeleon GmbH, an Austrian-registered company, and the SoftSwiss group, which is led by Ivan Montik and Pavel Kashuba.
Corporate Governance Concerns: He raised questions about the involvement of the President of CCI France-Estonie in the governance of CoinsPaid, suggesting potential conflicts of interest.
Timeline of Events
The timeline of significant events related to these allegations is as follows:
2020: Frederic Hubin joined CoinsPaid and served on the management board.
2023: N1 Interactive was fined by Dutch regulators, receiving a penalty of €12.6 million.
2024: Hubin published his LinkedIn post, accusing CoinsPaid of engaging in fraudulent activities.
Connections Within the Ecosystem
Hubin’s allegations also extend to the relationships between CoinsPaid and other entities in the industry:
A.R. Merkeleon GmbH: The official owner of CoinsPaid is Alexander Horst Riedinger, an Austrian entrepreneur.
SoftSwiss Group: This group, led by Ivan Montik and Pavel Kashuba, has been linked to various activities in the cryptocurrency and gambling sectors.
Role of Law Firm Revera
The law firm Revera, particularly through partner Helen Mourashko, who is married to SoftSwiss executive Pavel Kashuba, reportedly manages the legal affairs of N1 Interactive. Kashuba served as the Chief Financial Officer of SoftSwiss until 2023, according to his profile on CrunchBase.
Call for Regulatory Action
Hubin’s accusations highlight the urgent need for regulatory scrutiny. The Estonian FIU is called upon to:
Investigate CoinsPaid’s involvement in facilitating illegal gambling payments.
Examine the corporate governance structures, particularly the role of CCI France-Estonie.
Stakeholder Responsibilities
Industry stakeholders are urged to assess the compliance mechanisms within CoinsPaid and its affiliated entities to ensure they adhere to financial and regulatory standards.
Legal Challenges in Online Casinos, Cryptocurrency Exchanges, and Crypto Processing
SoftSwiss and its associated entities, including CoinsPaid, AlphaPo, Merkeleon, and Dream Finance, have faced numerous allegations related to money laundering, sanction evasion, and fraudulent activities. Key individuals involved in these controversies include Ivan Montik, Max Krupyshev, Pavel Kashuba, Dmitry Yaikov, Roland Yakovlevich Isaev, and Paata Gamgoneishvili.
The Network of Companies and Their Legal Troubles
Regulatory Scrutiny: Operating in the online casino market presents various legal challenges. SoftSwiss, through its alleged parent company Dama NV, has incurred multimillion-dollar fines for failing to comply with gambling regulations.
Corporate Structure and Connections: Dama NV is closely associated with Direx NV, another gambling entity that faced investigations by the Australian Communications and Media Authority (ACMA) in 2019. The leadership of Direx NV includes Ivan Montik and Maksim Max Trafimovich, who are listed as directors and owners, with legal representation from Revera, a firm closely connected to SoftSwiss executives.
Crypto Processing Scandals: Many individuals associated with these companies, primarily of Belarusian nationality, have been accused of facilitating cryptocurrency transactions for the Russian market. These activities are alleged to help bypass sanctions while concealing illicit financial trails.
Key Legal Cases
Australian Investigations (2019): Direx NV was investigated by the ACMA for operating unlicensed interactive gambling services and neglecting player protections. Legal representation was provided by Revera, led by Helen Mourashko, who has ties to Pavel Kashuba, the CFO of SoftSwiss.
Dutch Regulatory Actions (2021-2023): In 2021, N1 Interactive Ltd. was fined €500,000 for unauthorized gambling services, lack of age verification, and inactivity fees. In 2023, the company faced a significantly larger penalty of €12.6 million due to repeated violations despite prior penalties. This regulatory action resulted in the operator of the Betchan website being rendered inaccessible in the Netherlands.
Allegations Against Individuals
The allegations extend beyond corporate entities to specific individuals linked to these operations:
Links to Criminal Networks: Ivan Montik and his associates, including Roland Yakovlevich Isaev and Paata Gamgoneishvili, have been implicated in illegal activities such as drug trafficking, Forex scams, and unlicensed gambling. Despite publicly distancing themselves from these activities, financial transactions suggest ongoing connections with criminal organizations.
Use of Bribery: Reports indicate that SoftSwiss and its affiliates have employed bribery as a tactic to evade regulatory scrutiny and mitigate potential legal consequences.
Unanswered Questions
The allegations raise several critical questions regarding oversight and accountability within these companies:
Oversight of Profits: The companies claim to have generated a profit of €13 billion. However, this figure prompts inquiries about who supervises these financial activities and whether there are hidden connections between these profits and illegal operations.
Regulatory Compliance: Stakeholders must consider the effectiveness of compliance mechanisms within CoinsPaid and its affiliates. Are these entities adhering to financial regulations, or are they exploiting loopholes to engage in illicit activities?
Conclusion
Frederic Hubin’s allegations against CoinsPaid have sparked a significant discussion about the integrity of cryptocurrency payment processors and their connections to illegal activities. The call for regulatory action emphasizes the need for thorough investigations into the practices of CoinsPaid and its affiliates, as well as the broader implications for the cryptocurrency and online gambling industries. As the situation unfolds, it remains crucial for regulatory bodies to ensure that compliance mechanisms are in place to prevent fraudulent activities and protect consumers. The ongoing scrutiny of these entities will be vital in maintaining the integrity of the financial ecosystem surrounding cryptocurrencies and online gambling.
