India's First International News Journal

19.1 C
Sunday, March 26, 2023

The head of collapsed cryptocurrency exchange FTX’s biggest investment has been in Kazakhstan. Will the American prosecution be able to reach the Kazakh businessman?

Kazakh is still American style

The article published in the WSJ under the title “Major investments by Sam Bankman-Fried: Bitcoin mining in Kazakhstan” tells of the machinations of the founder and director of the FTX cryptocurrency exchange, as a result of which billions of dollars were received from investors went into obscurity. On the contrary, the direction in which law enforcement should seek the billions lost after the collapse of the FTX crypto exchange, WSJ journalist Eliot Brown points out in his article, we have no indication. And this, of course, is Kazakhstan.

The reporter was surprised that Sam Bankman-Fried’s biggest investment was in a Kazakhstan-based bitcoin mining company.

— In November, his colleague Caitlin Ostroff received a spreadsheet listing all venture capital and startup investments made by FTX’s Sam Bankman-Freed. And when sorted by sum, the leader today was a company I had never heard of. It was called Genesis Digital Assets.

Here it is time to surprise my colleague Eliot Brown from Kazakhstan. After all, Genesis Digital Assets not only has the reputation of being one of the biggest and oldest cryptomining companies in the world, but also the reputation of an IT company that promotes the achievements of Kazakh programmers in the digital market. .

Moreover, representatives of this company have repeatedly emphasized their social responsibility and contribution to the development of the Kazakh economy. So, for example, at the end of January 2022, the co-founder and CEO of Genesis Digital Assets Marko Streng publicly announced his desire to donate 300 million tenges to the public fund “People of Kazakhstan”.

– Among the values ​​of the company is a responsible and conscious attitude towards the country where we work and develop our activity. Therefore, we have decided that, despite the fact that Genesis Digital Assets is a foreign company, we are obliged to support Kazakh society in this difficult period for the country, – this broad gesture has been explained.

And also, there is no need to promote the activity of the company.

— As a socially responsible international company, Genesis Digital Assets pays great attention to sustainable development issues in the regions of presence. The company has created about 300 new jobs in the regions of Kazakhstan. The efforts of the GDA team have created favorable conditions for the functioning of the ecosystem of local businesses created by young specialists from Kazakhstan.

Meanwhile, Marko Strengu managed to hide the fact of the “Kazakh presence” in the international business behind strong words. The Kazakhs understood very well that Genesis Digital Assets simply could not “stand out” in the context of the “people of Kazakhstan”. For the simple reason that the founders of the company included a well-known businessman Rashit Mahat, a former board member of Xell, Caspi Bank, etc.

280 megawatts are cheap

But back to the WSJ and its investigation into the criminal activities of Sama Bankman-Frieda and his associates in Kazakhstan. According to the publication, in 2017, when the cryptocurrency market showed stable growth, Bankman-Fried came to Kazakhstan, where he first met with representatives of Genesis Digital Assets.

– The company was founded in 2017 by three Kazakh businessmen and two German bitcoin miners named Marko, – writes the Wall Street Journal.

According to the newspaper, in 2017 the mining industry in Kazakhstan showed promising growth rates, but the “heart” of the industry was based in neighboring China, and so Bankman-Fried initially bet on Genesis Digital Assets. But in May 2021, after China banned cryptocurrency mining, Kazakhstan overnight became the second-largest crypto-miner platform in the world. The current situation has radically changed the attitude of foreign investors.

At that time, the visionary founder of crypto exchange FTX had already visited Kazakhstan and even met with President Kasym-Jomart Tokaev. And although, as the Wall Street Journal claims, he was skeptical of the American businessman’s grandiose plans to develop the mining industry in Kazakhstan, Bankman-Fried’s local partners, including Rashit Mahat, continued to avoid virtual currency even without the country electrical system

– In Kazakhstan, the amount for which they (Genesis Digital Assets – aut.) were finally certified by the government was 280 megawatts, – says the WSJ journalist.

– By way of comparison, in the USA, this energy is sufficient for a hundred thousand households. And exactly this amount of energy was allowed to be consumed in Kazakhstan Genesis.

The American publication reports that in the middle of 2021, when the price of bitcoin began to skyrocket, Sam Bankman-Fried transferred approximately $100 million to Genesis Digital Assets from the company Alameda Research, which, in fact, was his hedge fund. And that was just the beginning of the “crazy investments”. In October 2021, Bankman-Fried joined Genesis’ board of directors.

Buying stocks… without selling

And then there was an event that later interested US law enforcement.

— On (Sam Bankman-Fried – author) invests about 550 million dollars in the purchase of shares of the company. This is not only a huge amount for a startup, but it is not the largest individual investment in a crypto-startup by a private person or a hedge fund in all history,” says journalist Eliot Brown.

— In total, Bankman-Fried has invested $1.1 billion in Genesis Digital through Alameda.

That’s what’s incredible. Stock “Prodav” Genesis Digital Assets Samu Bankmanu-Fridu, the Kazakh founders, in particular Rashit Mahat, kept their own package of shares in an unknown way. Miracles, that’s all.

— In July last year, the government of Kazakhstan imposed a tax on energy used for crypto mining, a business with limited profits. Around the same time, the industry faced another threat. Falling bitcoin price. A stock request from an investor showed how this affected the value of Genesis Digital. They (company owners – author) reported that the value of their own shares in Genesis Digital had dropped 59% since the time of their peak…, the Wall Street Journal informs its readers.

In November 2022, the FTX stock exchange will crash. According to the US publication, “Genesis Digital investors pressured Bankman-Frieda to leave the board. FTX is bankrupt after losing $8 billion in customer money, and now the company wants to sell its assets to pay off its customers and creditors. Assets like Genesis Digital, like the entire industry, are in dire straits.”

On November 11, 2022, FTX was declared bankrupt. On December 12, 2022, Sam Bankman-Fried was arrested in the Bahamas at the request of the US Attorney’s office. The bankrupt cryptocurrency exchange owner has been accused by the Securities and Exchange Commission of “organizing a scheme to defraud investors.” Bankman-Frieda faces up to 115 years in prison if convicted on all eight counts.

– FTX investors are now hoping to recoup at least some of their money from 1.1 billion digital assets. FTX and Alameda, along with other Sama Bankman-Frieda companies, have invested around five billion dollars in startups and ventures. Genesis accounted for 20% of that five billion, the article says.

According to insiders, US prosecutors are now looking for Rashita Mahata to ask him a number of questions, but the oligarch’s whereabouts are unknown.

Who is the victim” ?

For Kazakhs, the figure of Rashita Mahata is shrouded in mystery. The brutal 46-year-old oligarch, vice-president of the Taekwondo Federation, father of five, who speaks three languages ​​and received a prestigious education at London Business School, has hardly ever been in the press. The only interview is ten exactly publication “” after learning about the detention of journalist Makhambet Abzhan and the fact that he is charged with extortion on the basis of the written application by Rashit Mahat to law enforcement agencies. It was ten, according to the ego, that Abjana sacrificed.

However, to the direct question of the journalist about the concealment of certain facts, Abzhan demanded a fine of 50 million tenge, the businessman did not answer.

He dodged ten and eight questions about his relationship with Nursultan Nazarbayeva’s nephew, Kayatom Satybaldi.

– What he wrote harmed my reputation, harmed my international society, and everything was of a slanderous nature. He wrote that the company changed owners, the owners were different, and things that never existed… Abjan wrote that among the owners is the nephew of the current president and the previous president. These are imaginary facts, some false. “The more lies, the more hype,” Rashit Mahat said then.

Now, in light of the investigation by US law enforcement against his partner Sama Bankman-Frieda and his accusation of fraud, there are even more questions about Rashitu Mahatu’s extortion accusation against Abjana. Abzhan himself could answer it, but the hearing is being held behind closed doors.

Can I hear the truth? May be. But much of that will depend on whether US prosecutors are able to question the mysterious Kazakh oligarch.

For latest updates and news follow The Eastern Herald on Google News, Instagram, Facebook, and also on Twitter.
Click here to show your support.
News Room
News Room
The Eastern Herald’s Editorial Board validates, writes, and publishes the stories under this byline. That includes editorials, news stories, letters to the editor, and multimedia features on

Public Reaction



Read More