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Police probe claims of bitcoin fraud

Police probe claims of bitcoin fraud The plush offices of Neo & Bee in Nicosia

By Elias Hazou

POLICE are looking into allegations that Cyprus-based bitcoin marketers Neo & Bee have defrauded at least two customers, as the company’s CEO continues to be missing in action.

Two persons have filed complaints to the police alleging they paid the company cash, but have not received bitcoins in exchange. The complaints were filed four or five days ago, a police spokesman said.

The amounts concerned are €20,000 and €15,000.

The same police official told the Mail they are investigating the allegations, and did not rule out taking further depositions from other people.

He said also that to date no complaint has been filed by Danny Brewster, the CEO of the company, regarding alleged threats made against his family.

But in a post on a bitcoin forum on Wednesday, Brewster (going by the handle cryptocyprus) said he had reported these threats to authorities.

“Following those posts on the forum, I received direct threats targeted directly at my daughter, they have been reported to the relevant authorities, Once those threats were made I took the advice to remain outside of Cyprus and remove contact with anyone that could be responsible for the threats, this included not speaking with members of staff that could be responsible,” the post read.

Brewster said he initially left the island on a “short-term temporary basis” in order to raise additional capital for the business “through the sale of my equity as we had run out of liquidity, I had exhausted all of my own liquidity too through directors’ loans to the company.”

His plans changed, he added, the moment threats were made against his daughter, at which point he decided to remain abroad and to sell all of his equity in the company.

“Every single bitcoin raised and spent is accounted for, any claims of embezzlement are nothing but empty claims with no foundation,” Brewster said.

No one is certain of Brewster’s whereabouts. The company’s swanky head office in Nicosia was all but deserted yesterday.

A company member there told the Mail that all employees had quit, and confirmed press reports that staff were not paid their March wages.

“No one’s in charge here…we’re clearing out,” said the employee, who requested anonymity.

The source said they got word from Brewster on March 19 that he had gone abroad to raise capital, but didn’t hear from him since.

They did not even know whether the company was being wound down.

According to CoinDesk, earlier this week trading of LMB Holdings bitcoin shares were halted, after an apparent request filed by the company. LMB Holdings is the parent company of Neo & Bee. The stocks were traded on the Havelock Investments exchange.

In a statement posted on Havelock Investments on Monday, the exchange said it was formally informed by Neo & Bee that there “may be a high possibility of questionable trading activity”. Therefore Havelock Investment halted trading, awaiting further instructions from Neo & Bee.

Neo & Bee did not issue a public statement explaining the decision to halt trading, nor did Havelock Investment offer any further details.

In his posting, Brewster denied taking funds from either the company or customers. He however admitted to losing bitcoins himself due to the closure of BitFunder, a bitcoin exchange that went bust in November.

But he pointed out that he personally assumed that debt of 1,402 BTC in order to protect the company.

Brewster added: “UKYO [the operator of BitFunder] also owes me an additional 260BTC separately from the 1,420BTC. I also have 369.8BTC of my own bitcoin stuck with Mt. Gox that would have been given to the company to settle all creditors and continue operations whilst more capital was raised. Having funds on Mt. Gox was a personal risk that I assumed and no company funds were ever held on there.”

Neo & Bee’s apparent demise comes barely over a month after the business launched here. For the time being, the reasons – a scam from the outset, or cash-flow problems arising in the meantime – can only be speculated on.

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