Mt Gox has become the ongoing meme for any negative story in the Bitcoin space. It is, and remains to date the largest loss by any Bitcoin exchange, but unlike what we are about to describe to you, it was anything other than elaborate: it was either a case of hacking or insider theft. The tale of Tadas Kasputis and his related Bitcoin companies is far more complicated, spans multiple countries, and may quite possibly be the most elaborate Bitcoin scam in the history of Cryptocurrency. Strap yourself in, this is going to be a long and detailed ride.

Any story of intrigue has a mastermind, and in this case our central character is Lithuania born Tadas Kasputis (pictured right.)

Kasputis first entered the alternative currency and High Yield Investment Program (HYIP) space in November 2006 while still a student at the Kaunas University of Technology (KUT,) Kaunas, Lithuania. He became involved in the running  (the record is not clear whether he was a founder or employee) of a company called Regal Fund Diversified Inc. (Regal,) a HYIP that offered the typical returns you expect from a pyramid scheme: “6.5% weekly investment payout of total principle…total 100% return principle + 238% return profit after first year, then total 338% again for each following year for life.”

Regal also offered RegalPay, an Ecurrency that predated Bitcoin, among other services.

The only thing clear from the era is that Regal eventually followed the path of all ponzi schemes and had failed by September 2009. A user in a post on Talk Gold points the finger at Kasputis, and alleges that the site had been run from the beginning by “young kids from Pakistan and Lithuania.”

The Bitcoin Era

From what we’ve been able to ascertain, Kasputis had a short break following the collapse of Regal, although there are fleeting mentions of him on HYIP forums through the period. In around 2010 he established a company by the name of UABHappyness in Lithuania; at the time of writing (and due to a lack of Lithuanian language skills) we are unable to ascertain exactly what UABHappyness did; it may have been a legitimate company, although there is some suggestions it may have been involved in HYIP programs. The relevance though to what is to come is that it provides a direct link to his future co-conspirator Paulius Meskauskas, a fellow KUT student who was to go on to front one of Kasputis’ companies.

During this period he established EgoPay, a Bitcoin exchange company that we reported last week ceased trading and possibly stole millions. At the time of writing through third party media reports and direct contact with EgoPay clients, we can ascertain that they have stolen at least $500,000, and that’s only from a small range of its larger clients. Most Bitcoin companies that dealt with EgoPay have either refused to respond to our requests, or have declined to say how much they have had stolen; those who won’t give us a figure all confirm that the company is no longer trading.

The dates for the establishment EgoPay are no more clear that its company structure. The domain name was registered in July 2009, but there are mentions of it on HYIP forums prior to that date.

In its early days EgoPay claimed to be registered first in Belize, then later (and at the time of writing) Seychelles. We have been unable to ascertain whether it was ever registered in Belize as company records are not available to the public, but they are in the Seychelles, where there is no record of the company existing.

In its privacy policy EgoPay is listed as a registered trademark of E-commerce World Wide Group LTD; again there are no records of such a company in Belize or Seychelles, but there is half way across the world.

The New Zealand connection

E-commerce World Wide Group LTD is a registered company in New Zealand with Kasputis as the sole director and a country of origin listed as Belize.

The addressed given is a SERVCORP virtual office in Auckland. While we note that we are suggesting nothing untoward here, also sharing a SERVCORP virtual office in Auckland (although not the same building) is Tony Lentino, the largest investor into Kim Dotcom’s Mega company, and more notably the registered owner (via its domain name) of Bitcoin exchange BTC-e, which currently claims to have lost $80,000 to EgoPay.

Despite attempting to contact Lentino via Mega.co.nz, he has not responded to our requests at the time of writing.

All roads lead back to Lithuania though; and via the New Zealand registration we discover the world headquarters for Kasputis for the first time (the address appears repeatedly as we dig deeper:) a cold war era apartment at Vetrunges 14-25, Kaunas. 

Given the figures involved in the scam we find it unlikely this is where Kasputis lives; it could perhaps be the place of residence of family or friends, but this is the registered address of a multi-million dollar business.

One aspect of the EgoPay setup was not only a Bitcoin exchange; the company offered its own EgoPay currency and offered certification to other Bitcoin exchanges in a similar way to a Better Business Bureau or Verisign stamp. As we dug deeper we found that both were used in other businesses Kasputis set up.

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Virtex Systems Ltd

Not content with running EgoPay alone (which has been accused of scamming customers since 2012) Kasputis expanded his scam empire, launching Virtex.com to glowing endorsements by various outlets including Cryptocoins News in July 2014.

The company, not to be confused with the similarly named and unrelated Canadian exchange Cavirtex, (the choice of the Virtex.com name was probably not accidental) was billed as a “new Bitcoin and Litecoin exchange based in Lithuania.” Along with traditional cryptocurrencies, Virtex.com also offers transfers to and from EgoPay.

SiliconANGLE can confirm exclusively that Virtex.com ceased trading on or about January 8th at the same time as EgoPay. Along with reports on various forums, we have been in contact with 14 different customers of the site who all report the same thing: the company has ceased trading, they cannot withdraw funds and the company isn’t talking. The amounts are relatively small, and total nearly $100,000, but that’s from a very small sample base of the companies clients; potentially the amount stolen via Virtex.com could again be in the millions.

Kasputis is not listed in the media reports when the company launched, but his co-conspirator Paulius Meskauskas is listed as CEO, along with Tomas Andzelis as CMO, and Mantas Gustys as CRO. Of the latter two we can find no links to Kasputis and they may well be legitimate hires, but of Meskauskas there is no doubt; they worked together and went to University together.

The company trail for Virtex.com is just as colorful as EgoPay. Although operating in Kaunas, Lithuania, the registration of the domain take us back to Seychelles. The address given is the same as AAA International Services Ltd., a company that specializes in “corporate management services.” That company appears to be nothing more than an address provider in Seychelles for foreign firms wanting a Seychelles address for registration purposes.

However we can find no record of Virtex Systems Ltd. being registered with the Seychelles Government, despite a publicly searchable database.

The trail then takes us back to New Zeland.

The “banker”

When Virtex.com launched, Cryptocoin News and others noted that “their main partner for deposits and withdrawals from bank accounts is Arex Limited, who have their financial license in New Zealand.”

Arex Ltd. is both a registered company and financial services license holder in New Zealand, but it doesn’t hold a banking license. Its registered address is a residential house in Mount Eden, a suburb of Auckland (pictured).

Please note the following in relation to Arex Ltd. is amended from the original post following correspondence with Erik Schryvers February 12th. 

The sole registered director of Arex Ltd., and therefore the supposed “banker” for Virtex.com, is Erik Schryvers of Oostmalle, Belgium.

In emails received by SiliconANGLE since this post was first published, Schryvers has denied any ongoing link to Virtex.com. Although we noted this at the end of the post following initial contact, Schryvers has since threatened legal action against this publication.

Via email Schryvers states that “[Virtex.com] did contact us last year in order to be their payment processor for Virtex and Egopay.”

“In first instance, we agreed to work with them but then, after we did our due dilligence, we found out that neither Virtex nor Egopay had any financial license in order to operate their businesses.”

The emphasis is ours. We would also note that we never connected Arex Ltd. to EgoPay, only Virtex.com. The fact that Schryvers connects the two further confirms that they were both the creation of Tadas Kasputis.

Further Schryvers claims further that “under these circumstances, we refused to be their payment processor.”

On a followup, when asked the obvious question as to why Schryvers was happy to have the name of the company remain referred to by various media outlets, let alone Virtex.com itself, Schryvers claimed that “we weren’t aware of the articles in the Bitcoin press previously as we were concentrating on other things.”

We would note that the ONLY difference between the previous Bitcoin press coverage, and this article at SiliconANGLE in regards to Arex Ltd. (all easily found via Google) is that we actually named Schryvers as the sole director of the company, where previous mentions simply mentioned the company.

That said SiliconANGLE is unable to disprove Schryvers claims, as the sole director of Arex Ltd., that the company did not actually engage in a full and or ongoing financial relationship with Virtex.com, and hence we withdraw any such implications that may have damaged Mr. Schryvers reputation, and hereby apologize, with reservations.

However we do stand by certain facts, such as that Schryvers started his online career pushing multi-level marketing scams, later graduating to HYIP programs; he’s also taken an interest in crytpocurrency exchange services, having registered names including ekopay.com.

Last but not least Schryvers claims that he was never contacted by the author of this article prior to publication and therefore this publication egregiously lied; the previous version of this article claimed (accurately) that Schryvers was contacted and did not reply at the time of publication.

For the record a “legitimate” financial service provider doesn’t make themselves elusive and hard to contact online, let alone doesn’t have a website, and has a registered company address in a run down house in Mt. Eden, Auckland New Zealand. And here’s the catch: under New Zealand financial services law, he’s also in breach of the law in being so elusive.

After extensive research and effort, Mr Schryvers was contacted over 5 days before the original version of this article was published via Facebook.

Given SiliconANGLE is being threatened with legal action, and one claim of undue process by Mr.Schryvers is that he was not contacted, the author of this post is more than happy to have his Facebook account audited via third party. Here’s a screen shot for the record Erik.

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Paymentbase.com

The next company with links to Kasputis takes us to Pakistan and another Bitcoin exchange the offers transfers through EgoPay: Paymentbase.com.

As we mentioned earlier, Kasputis was named as running RegalPay with “Pakistanis” early in his career. The current registration record for Paymentbase.com takes us to Pakistan and is owned by a “Base Corporation,” which upfront doesn’t say much, but the historic record for the domain and the ownership of the company do.

The previous registered owner of the domain was Tadas Kasputis and the Base Corporations headquarters were one cold war era apartment in Kaunas, Lithuania.

At the time of writing SiliconANGLE has evidence that Paymentbase.com ceased trading on or around January 8th (as with Virtex.com and EgoPay), although the exchange seems to be significantly smaller in its online presence than that the other two companies.

Too long, didn’t read

If you’ve gotten this far here’s the short version: Kasputis set up an elaborate network of companies across the globe to ultimately scam millions of dollars.

What we haven’t covered thus far is that our investigations reveal that EgoPay in particular was an extraordinarily popular payment provider to HYIP scams (an angle we’ll cover in future); in ceasing business, Kasputis has literally stolen from other scammers.

What we don’t know is whether or not a scam was Kasputis’ intention from the beginning. It seems that for several years EgoPay actually was above-board to an extent, although by providing services to scammers during this period it was committing an illegal act, depending on the jurisdiction.

Whatever the original intent was behind the scam is irrelevant; millions have been stolen in a shonky setup that for whatever reason nobody in the Bitcoin community bothered to investigate.

If you’re a victim of this scam your venues for recompense are limited; the best bet would be to contact Consumer Affairs New Zealand, New Zealand police, and possibly even your own local police force. In the United States,  this is potentially something the FBI would be interested in investigating.

To everyone else, be aware that Kasputis and his Bitcoin scams are not representative of the entire Bitcoin marketplace, but the story does teach an important lesson: Do basic due diligence on any company you’re giving money to. If the company isn’t registered in a well-known jurisdiction (Seychelles isn’t one), stay well away.

Update: Arex Ltd. has denied involvement in Virtex.com in correspondence with SiliconANGLE and say that while they were in discussions with the company, they never agreed to provide banking or financial services for them.

Image credits: Ateits/ Google/ owners