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BTC-e – Anonymity reigns at world’s second-largest bitcoin exchange

Collapse of puts bitcoin accountability issue squarely in focus

by Frank Quin


The facts – such as they are

Its founders and owners are supposedly called Aleksey and Alexander, which could be pseudonymous, and they may or may not be young and Russian.

Its domain name is administered by the branch of an Australian domain-hosting company in Johnsonville, on the outskirts of New Zealand’s capital city of Wellington. Its support desk runs on a program supplied by an Indian company with an office in England and the content is in Russian and English. No physical contact details and/or phone numbers are provided on the website.

The payment collection service it uses operates out of Moscow, Russian Federation and Kiev, Ukraine. The operation itself may or may not be located in Cyprus but it apparently uses the services of a branch in the Czech Republic of a major German bank. Funds apparently find their way there via a UK financial services agency registered in the British Virgin Islands.

Welcome to the distinctly opaque world of BTC-e – with the seemingly terminal demise of MtGox now reputedly the world’s second-largest bitcoin exchange.

Then there’s the ‘Bulgaria connection’

The above insights have been harvested from a range of open sources on the World Wide Web. It’s not much to go on and, bizarrely, what we haven’t been able to find is more than a scintilla of evidence for the oft-repeated description (we ourselves are guilty) of BTC-e as ‘Bulgaria-based’.

But then, the other surviving major – Bitstamp – is equally routinely described as ‘Slovenia-based’, raising the spectre of south-east European domination of world bitcoin trading. Bitstamp indeed has a Slovenian founder and CEO – one Nejc Kodrič, whose photo on his page could have been taken for his high-school yearbook, he looks that young – but on the exchange’s website, in the only entry in the ‘About Us’ section, Bitstamp is placed in the picturesque village of Aldermaston in Berkshire, UK.

Back to BTC-e, and the purported Bulgaria connection, here’s an illustrative extract from a story running today at, about American Barry Silbert’s plans to establish a regulated US-based bitcoin exchange.

The two main Bitcoin exchanges aside from the crisis-ridden Mt. Gox — Bitstamp and BTC-e — are based in Slovenia and Bulgaria respectively.

Well, as mentioned earlier, we can’t find anything which puts BTC-e in Bulgaria in any shape or form.

BTC-e joins Facebook - perhaps

The exchange does have a page on Facebook though, as of Sunday last and as of this minute with six likes. It’s entirely possible that neither Aleksey nor Alexander had anything to do with that initiative because a feature of bitcoin is of course that everyone is allowed to do pretty much anything they want, and the page byline says that it’s ‘for BTC-E exchange traders’.

Regardless of who created that Facebook page, don’t bother going there if it’s substantive – or indeed any – information about BTC-e that you’re looking for. There isn’t any.

Trying to nail down where BTC-e might be found by using the website’s ip address, publicly available at whois, didn’t help. The site uses the Cloud Flare CDN service and in consequence returns a different IP depending on where you query from. If you request that site from Europe, as we did, it returns the content of the site from Cloud Flare servers in Europe. Ditto if you’re in the United States – you get a US ip address. In fact the site could be located anywhere in the world. That’s the Cloud for you.

Aleksey and Alexander speak to the media - apparently

How do we even know that BTC-e’s proprietors are Aleksey and Alexander? Only because – and to the extent that – some e-money media say so. On 11 December last, ran an item about ‘recent banking issues’ experienced by BTC-e customers and indicated that they – – actually got voice-to-voice with Aleksey and Alexander, though “they wouldn’t share their surnames”.

But felt able to write:

At least one of the banks involved in the process is located in the Czech Republic; the BTC-e site references Bulgaria in its SEO descriptions; the founders, Russian programmers Aleksey and Alexander, honed their skills at the Skolkovo tech park; and the BTC-e managing company is based in Cyprus.

That’s true by the way about BTC-e search engine results. If you google the name, you get under the website url the statement that it’s ‘a cryptocurrency exchange based in Bulgaria where users can trade Bitcoins’ and other things. You just don’t find that statement on the website itself.

For the ignorant on point, the ‘Skolkovo tech park’ mentioned by is more formally known as the Skolkovo Innovation Centre, a Russian government initiative being progressively developed just outside of Moscow, with the broad objective of lifting the Russian Federation’s game across all technology sectors. It does sound like the sort of place where Aleksey and Alexander might have indeed ‘honed their skills’.

Does it matter?

Should we – or anyone – care who is behind BTC-e or where it operates from? Knowing that had an office in Tokyo and a real face – that of the now much-hounded Mark Karpeles – hasn’t stopped that particular bitcoin exchange from shutting its doors, in all probability terminally and with significant loss to its clientele. And given that it is an absolute tenet of the bitcoin faith that no government controls it, the concomitant surely is that anyone shafted by the MtGox debacle or any other bitcoin-related shenanigan is entirely on his or her own.

It seems though that BTC-e itself cares. For just yesterday, a statement appeared in the News section of its website concerning the MtGox shutdown. After making predictably reassuring noises about the BTC-e operation, the statement says this:

The company plans to start publishing financial statements, verified by an external audit, on a regular basis.

Presumably those auditors will want to know, and may even insist on exchange users knowing, who calls the shots at BTC-e.

Interestingly, there’s a similar MtGox-induced statement at, also in News and also from yesterday:

Bitstamp is now performing quarterly financial audits and will post our financial reports on our website.

It’s scarcely credible to us here at that any investor would entrust either fiat money or bitcoins to an exchange about which not one iota of information is volunteered on the exchange website, so thumbing its nose at any suggestion of accountability should things go pear-shaped.

Seemingly Aleksey and Alexander, or whoever they are, did come out from under their particular rock to talk to but that is hardly a substitute for transparency – perhaps ‘glasnost’ is the more apt term here – in the operation of a major financial exchange.

Maybe ‘they’ know

It’s occurred to us that there is perhaps some underground current of knowledge surrounding that we’re not privy to but that is shared by a cognoscenti within that exchange’s clientele. Certainly perusal of a sample hour of chatter early today on the BTC-e chat forum hosted by gave no indication that the exchange’s anonymity – or integrity come to that - is a live issue.

Which is fine for them, if such an in-crowd exists. But it’s not for the poor schmucks who may hereafter be induced to go trading on BTC-e, should it then follow MtGox into oblivion.

Aliosha, Sasha – it’s time to front up or sell out to someone who will.

Tags: bitcoin , BTC/USD , forex
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