Blum Co-Founder and Ex-Binance Exec Vladimir Smerkis Arrested for Alleged Large-Scale Fraud

Vladimir Smerkis, former regional director for Binance in the Commonwealth of Independent States (CIS) and co-founder of the Telegram-based crypto game Blum, has been arrested in Russia on allegations of extensive fraud.

The Zamoskvoretsky District Court in Moscow authorized prosecutors to demand that Smerkis be held under continuous investigation on May 18, 2025.

Russian official media TASS claim that the case concerns allegations under Article 159 of the Russian Criminal Code, which pertains to major financial theft

Authorities claim Smerkis was linked to fraud, possibly causing major investor losses. Should he be found guilty, he may spend two to twelve years behind bars.

From ICO Scandals to Telegram Games: Blum Cuts Ties with Co-Founder

According to a local publication, the probe apparently focuses on Smerkis’s participation in two cryptocurrency investment platforms started in 2017 during the first coin offering (ICO) frenzy: The Token Fund and Tokenbox. These sites offered easily available access to crypto assets, but finally fell apart, and investment losses were estimated at $15 million.

Russian prosecutors argue the projects were poorly managed and lacked regulatory oversight, suggesting that misleading practices may have been involved. Though these ventures predate Blum, they have raised questions about executive conduct and project accountability within the crypto ecosystem.

Smerkis later became a notable figure in the Web3 space through his role at Binance Russia and, more recently, as co-founder of Blum.

Blum, which initially gained support through Binance Labs’ Most Valuable Builder accelerator program, launched its interactive “Drop Game” in May 2024. The game allowed users to accumulate “Blum Points” by tapping falling snowflakes on their phone screens, with the promise that these points would later convert into tokens through an airdrop.

Following the arrest of Vladimir Smerkis, Blum quickly moved to distance the project from its now-former executive. In a statement posted to X on Saturday, Blum announced that Smerkis “…has stepped down from his role as CMO and is no longer involved in the development of the project or in any co-founder capacity.”

Also, the team emphasized that operations continue as planned, including the upcoming BLUM token airdrop scheduled for Q3 2025.

Fraud Charges Mount Against Crypto Executives Worldwide

The recent arrest of Vladimir Smerkis adds to a growing crackdown on crypto executives facing legal consequences for fraud tied to token sales, NFTs, and failed platforms.

In Illinois, Jonathan Mills, the founder of the Hashling NFT project and CEO of Satoshi Labs LLC, is being sued by investors who allege he diverted $1.46 million from joint ventures for personal use.

The civil suit, filed May 14, accuses Mills of fraud, breach of fiduciary duty, and unjust enrichment related to two NFT drops on Solana and Bitcoin blockchains that failed to deliver promised equity returns.

Meanwhile, Celsius Network founder Alex Mashinsky was sentenced to 12 years in prison on May 8 by U.S. District Judge John Koeltl. He pleaded guilty in December to two counts of fraud after defrauding hundreds of thousands of customers with false promises of high yields on digital asset deposits.

In a related case, Daniel Schatt and Joseph Podulka, former CEO and CFO of bankrupt crypto lender Cred LLC, pleaded guilty to wire fraud as part of a Department of Justice investigation into the firm’s 2020 collapse

Cred filed for Chapter 11 bankruptcy in November 2020, revealing widespread financial mismanagement. Both executives admitted to misleading customers and partners about the company’s financial health.

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