Bankoff’s Crypto Wallets Nearly Empty After Virtual Debit Card Provider Folds

The Delaware-registered company said Visa and Stripe cut it off for serving too many Russians, but on-chain data has stoked users' suspicions.

May 5, 2022 at 5:07 p.m. UTC

Anna Baydakova is an investigative reporter with a special focus on Eastern Europe and Russia. Anna owns a fraction of BTC.

Bankoff, a Delaware-registered company with operations in Azerbaijan, had been a way around harsh Western sanctions for ordinary Russians. No more.

The company provided virtual debit cards that could be topped up with USDT, a U.S. dollar-pegged stablecoin. (A virtual card is like a regular debit card, except it’s an app rather than a piece of plastic.) That allowed Russian citizens, cut off from the global financial system after Visa and Mastercard blackballed Russia, to keep buying things when traveling abroad.

On Tuesday, Bankoff clients received emails saying that the service had ceased operations, blaming Visa and the Silicon Valley payments unicorn Stripe.

“Today we’ve received a letter from Visa and Stripe that Bankoff Card services have been suspended due to the high volume of active users and transactions from Russia. It means our cards are no longer supported for any offline and online payments,” the message said, adding that the company is “trying to access funds that have been frozen in our USA account.”

“​​Unbanked once again. What a life!” tweeted the pseudonymous crypto influencer Banteg on May 3, adding: “F**k Visa.”

However, some users expressed doubts about Bankoff’s story.

Users get suspicious

It’s not clear what U.S. bank Bankoff used, if any, or what kind of relationship it had with Stripe. Neither Bankoff nor Visa nor Stripe responded to CoinDesk’s request for comment by press time.

CoinDesk spoke to five people who said their money was stuck in Bankoff accounts – some said they successfully used the service before to pay for online subscriptions and even food in a brick-and-mortar store outside Russia.

“I paid for some services in Europe and Turkey and also for food via ApplePay in a grocery store abroad,” said Alexander Kotin, product manager at blockchain project Lachain who used Bankoff. Like many other users, he lost just a small amount of money, around $60, he said.

In the meantime, some posters on online forums have speculated the company could have simply absconded with users’ money. Bankoff never published the letters it allegedly received from Visa and Stripe and has given no further updates since May 3.

The service had been working fine before, several users told CoinDesk, and allowed them to send payments via virtual cards. However, in comments on Bankoff’s blog posts, users often complained about waiting many days before their deposits became available.

“Many believe that Bankoff was a scam. I think of myself as an advanced user, but I haven’t found any clear proof that they actually were a scam,” said Anton Jdanov, CEO of virtual reality startup 360MAX.

Jdanov told CoinDesk he tried to use his Bankoff account to receive a payment from a client in Canada. However, he never got the money – a little less than $1,000 left his client’s account but never landed in his own, he said.

Wallet action

From looking at block explorer sites, users noticed that Bankoff’s crypto wallets had been emptied before the shutdown. However, some said this is not a definitive sign of an exit scam because Bankoff, apparently, needed to cash out the USDT it got from users to put fiat money on their virtual cards. The company most likely did it via two major crypto exchanges: FTX and Binance.

Bankoff users provided CoinDesk with two addresses where they sent USDT, one on the Tron blockchain, the other on Binance Smart Chain (BSC).

According to Tronscan, an explorer site for the Tron network, the wallet users identified as belonging to Bankoff regularly sent USDT to several addresses. These appear to be deposit addresses, which exchanges assign to users to put crypto in their accounts for trading. Some of the addresses sent money exclusively to addresses marked on Tronscan as belonging to FTX (1, 2, 3, 4) and some to Binance (1, 2).

According to blockchain analytics service Bitquery, the Bankoff wallet received a cumulative $6.12 million in USDT on Tron since Bankoff was founded in August 2020. By Thursday, its balance had dwindled to $751.22, according to Tronscan.

The BSC address identified by users as Bankoff’s sent large sums of money to wallets that appear to be FTX deposit addresses (1, 2), according to a review of BscScan. According to Bitquery, around $2.47 million in USDT went through Bankoff's BSC wallet in total. The address held $699.50 worth of USDT on Thursday.

Stripe, Tron and Wells Fargo

Bankoff was founded in August 2020, according to Crunchbase, and gained popularity among users in Russia this spring, after President Vladimir Putin invaded Ukraine and Russia became subject to heavy international sanctions.

After Visa and Mastercard suspended operations in Russia, Russians living or traveling abroad struggled to find ways to buy goods and services, from software licenses and online services to airline and hotel bookings. Russian expatriates found themselves cut off from their own bank accounts in Russia.

Bankoff came to the rescue with its virtual debit cards. According to a March 3 post on Bankoff’s Facebook page, the company recently crossed the 10,000-user threshold.

To get a card, a user needed to sign up through a bot in Telegram, WhatsApp, Meta’s Facebook Messenger or Instagram. Then, Bankoff would issue a virtual debit card and let the user top it up by sending USDT to its address on the Tron or BSC blockchain.

The service also taught users how to use Binance’s peer-to-peer marketplace to buy USDT and how to send it to Bankoff's own wallet, said Andrey Vilchinsky, chief technology officer at marketing firm BrandLink. He used Bankoff to book a hotel; however, the payment never went through, so he had to pay with cash upon arrival, Vilchinsky told CoinDesk.

According to a Telegram group chat among Russian Bankoff users, Bankoff used a Wells Fargo account. One user posted a screenshot of banking details Bankoff provided for transfers with Wells Fargo’s information. The SWIFT code in the screenshot matches one for international transfers on Wells Fargo’s website. The bank did not respond to CoinDesk’s questions by press time.

CoinDesk - Unknown

Screenshot of Bankoff's banking information, provided by a user

It’s not clear how exactly this scheme worked or whether Bankoff possessed any licenses to provide such financial services. The company’s website provides no information regarding licensing. A legal entity named Bankoff Company was registered in Delaware in April 2021, and its street address matches the one on Bankoff's website.

CoinDesk - Unknown

A legal entity named Bankoff Company was registered in Delaware in April 2021.

The “About Us” page is now unavailable. Bankoff’s LinkedIn page lists 14 employees, all based in Azerbaijan, including founders Elmir Aliyev and Mahammad Oruc. Both also co-founded Botbox, an IT firm creating messenger bots. Aliev and Oruc did not respond to CoinDesk's messages by press time.

Sage D. Young contributed reporting

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Anna Baydakova is an investigative reporter with a special focus on Eastern Europe and Russia. Anna owns a fraction of BTC.

CoinDesk - Unknown

Anna Baydakova is an investigative reporter with a special focus on Eastern Europe and Russia. Anna owns a fraction of BTC.

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