Crypto Project Co-Founder Arrested Over $15M Fraud Allegations

Vladimir Smerkis, co-founder of the Telegram-based crypto project Blum, has been arrested in Moscow on allegations of large-scale fraud. The Zamoskvoretsky District Court of Moscow approved a request from investigators to keep Smerkis in custody while he is being investigated. Smerkis, who previously ran operations for a major cryptocurrency exchange in Russia, is suspected of committing fraud pursuant to Article 159 of the Criminal Code of the Russian Federation, which can result in imprisonment ranging from two to 12 years. It is unclear if charges have been formally filed against Smerkis.

The fraud allegations against Smerkis are tied to his involvement in The Token Fund and Tokenbox crypto ventures that he co-founded in 2017. Investors in these ventures reportedly suffered combined losses of around $15 million. Blum, which is not involved in The Token Fund and Tokenbox ventures, has confirmed that Smerkis resigned from his role as the firm’s chief marketing officer and would no longer be involved in the project in any capacity. Blum has stated that its team remains fully committed and focused on its goals and that its day-to-day operations would continue as usual.

Blum is a crypto project that integrates a decentralized exchange into Telegram Mini Apps, enabling users to trade crypto, earn rewards, and participate in token airdrops. The incident has sparked concerns among users that Blum’s token airdrop, which was hinted at in an April post, may not follow through as planned. Blum users could receive BLUM tokens by earning Blum points in its newly launched Drop Game, where users tap on snowflakes falling from their mobile phone screen, and convert those points into tokens during the project’s slated token generation event. However, the news of Smerkis’ arrest appears to have shaken community confidence that the BLUM token airdrop will happen. Users have expressed their concerns and doubts about the project's future, with some questioning whether the airdrop will occur as planned.