On June 14, 2022, we published a joint study by the Economic Security Council of Ukraine and the international intelligence community InformNapalm on how companies from Switzerland, Italy, and Germany help russia circumvent sanctions to produce weapons. This study has been translated into many languages and has caused a significant resonance in the Ukrainian and foreign media. Readers have rightly pointed out that it is not only European countries but also Ukraine that host russian business that tries to circumvent sanctions. To reveal such business, we publish a new study on the activities of the 1XBet bookmaker and the influence it has. A company has russian final beneficiaries, yet it was licensed during the war in Ukraine and now, it is trying to use its influence to circumvent sanctions in various countries.
Who owns 1XBet
1XBet worked in Ukraine even before gambling was legalized in the country, it was laundering money via miscoding. This way, in PrivatBank, payments to the betting site were named housing and communal services.
The “official” 1XBet registered in Ukraine will operate on behalf of Your Betting Company LLC (Ukr. ТОВ «Твоя беттінгова компанія»). It was registered in June 2021 and, from a legal perspective, does not have any connection to the russian company, apart from the brand. This is the conclusion reached by the Ukrainian Commission for the Regulation of Gambling and Lotteries (KRAIL) specialists and this is why they issued two licenses to Your Betting Company LLC: one for bookmaking and another for organizing gambling on the Internet. The company has one “owner”, Serhiy Petrovych Tsybin. This businessman from Dnipro city has other dubious assets. He and his family are associated with some businesses in Ukraine and abroad.
Officially, 1XBet is a large fragmented structure made up of hundreds of companies around the world. It is a multi-level system of offshore enterprises that are intertwined with people, services, and contracts. Some companies are responsible for the development, some for marketing, others for finance, intellectual property, and other activities. Legally, there is no single ultimate owner in this group, and it may seem to be no connection between some of the companies. This system was built for about 15 years so that 1XBet could operate both legally and illegally, and the real owners were protected from claims by government agencies and law enforcement agencies in different countries.
However, the ultimate owners of this business do exist. Since the founding of 1XBet, they are three russians: Roman Semiokhin, Sergey Karshkov, and Dmitry Kazorin. They created the first betting platform 1XBet in Bryansk, russia. Sergey Karshkov used to be the head of the Bryansk department of the russia’s Ministry of Internal Affairs to combat cyber crimes, Roman Semiokhin has a joint business in breeding rabbits with the wife of the former mayor of Bryansk, a Bryansk Regional Duma deputy, construction tycoon and a member of the United Russia party Nikolay Patov. Later, Roman Semiokhin switched his interests totally to the construction industry. According to the local media, he bought most of the commercial real estate in the city and became one of the most influential people in the region. And a little later, together with his colleagues, he was a participant in a criminal case concerning the activities of 1XBet in russia. At the moment, all the founders are allegedly on the international wanted list.
However, this is official information. The real-life is that Semiokhin and Karshkov live in Cyprus, they are not afraid of any arrests and walk freely around Limassol with no guard. And they also do business there. And their business is not limited to betting. Like in Bryansk, they are buying up land in Cyprus and are engaged in the construction of housing. In particular, they are building their own 22-story office, which will house 1XBet developers.
Source: YouControl (screenshot) – translation below.
Source: YouControl (screenshot) – translation below.
Sergey Karshkov. Source: Russian Forbes video about 1XBet (screenshot)
Roman Semiokhin. Source: Russian Forbes video about 1XBet (screenshot)
They openly talked about this with the russian edition of Forbes and even invited the reporter to the construction site. They are also organizing the Beon1x music festival in Cyprus, where the world’s best DJs are invited to play. This is considered the necessary “social contribution” to the development of Cyprus, and this helps the 1XBet founders to work on the island freely and receive the local authorities` support.
In russia, the founders of 1XBet no longer have any problems either. The company’s beneficiaries mysteriously disappeared from the criminal case, and only the nominal owners ended up in prison. It can be linked to the sponsorship contract concluded between 1XBet and the russian FC Dynamo. Bookmakers have paid more than 500 million rubles for the contract, although its market value does not exceed 120 million. Given that FC Dynamo belongs to the russian security forces through VTB Bank, such a contract is a typical bribe solving problems of 1XBet owners.
The fact that 1XBet owners do not have any problems in russia and feel safe there can be proven by another fact: despite the blocking of 1XBet websites in russia, another group product, 1xStavka, continues to operate without hindrance from law enforcement and state regulators.
Semikohin and Karshkov have a favorable position. On the one hand, they do not deny that 1XBet is their business. They even brag about it. On the other hand, they state that they do not own any 1XBet website. They also compare their network with McDonald’s, which distributes franchises, and on the ground, the “owners” change it and conduct their activities independently.
Roman Semiokhin at the construction site of his own 22-storey office in Cyprus. Source: Russian Forbes video about 1XBet (screenshot)
In fact, the founders of 1XBet closely monitor the activities of each resource. However, this does not save the office from high-profile scandals. The loudest one in recent years was associated with the suspension of 1XBet in 2019 in the UK after an investigation by The Sunday Times.
The Gambling Commission, the British regulator, reacted quickly to The Sunday Times’ publication. As a result, 1XBet has lost its license in Britain. Chelsea, Liverpool, and Tottenham have received official warnings of prosecution and multimillion-dollar fines if they continue to promote the russian bookmaker brand. This case was the first significant intervention of the regulator in the financing of clubs by the gaming industry.
The executive director of London-based White Bullet Solutions, which works with public, legal and private clients on intellectual property theft, said 1XBet is in the sights of law enforcement in many countries.
The 1XBet also lost its license in Kenya, where it has been convicted of promoting and engaging young people in gambling.
Source: website fcdm.ru
Source: The Sunday Times (screenshot)
The bookmaker faces the same problem in the United States. With no permission to operate, 1XBet tried to attract US players to its resource by offering a registration bonus of more than $100. Blocking sites generated multi-step instructions for connecting to the system. The russian bookmaker has worked for years in many other jurisdictions with help of this scheme. And then, 1XBet was noticed by representatives of the American Motion Picture Association. Among other things, they analyze the piracy threats. Previously, they only reported about pirated sites, mobile applications, streaming services, and hosters. In 2019, they introduced a new section: “Ad networks and online advertising entities.” There was only one name in it – 1XBet (russia). The brand has been accused of mass advertising on pirated resources and promoting piracy around the world.
Regarding piracy threats. Source: Report of the American Motion Picture Association, September 30, 2019
Since then, 1XBet has been a regular contributor to the MPA report submitted to the US. Trade Representative’s Office in Washington. The latest report in this regard is dated October 2021.
After these incidents, Semiokhin and Karshkov’s business began to face difficulties with banking institutions and partners worldwide. Due to the lack of transparency in financial transactions, 1XBet uses cryptocurrencies and other financial engineering solutions instead of bank accounts.
The Ukrainian regulator, the Commission for the regulation of gambling and lotteries, did not notice this either, as it did not notice the russian founders of the company either.
How 1XBet paved the way for the Ukrainian gambling regulator
Without corruption, a russian company with such a background would never have acquired a license in Ukraine during the full-scale russian invasion.
Even at the stage of legalization of gambling in Ukraine, experts said that the bill was drawn up in the interests of russian betting and gambling companies. In particular, in the interests of 1XBet. Latvian citizen Boris Baum lobbied it. Later, he became the gray cardinal of the gambling market of Ukraine, which still has a decisive say in licensing. Officially, Boris Baum holds the position of First Deputy Chairman of the Commission for regulating gambling and lotteries (from now on referred to as KRAIL) Advisory and Expert Council.
Boris Baum. Source: Dev.ua.
Baum has been closely associated with the russian “businessman” since the 1990s and now with the State Duma deputy, deputy head of the State Duma, and Putin’s special envoy Alexander Babakov. He used to be known as a member of the russian organized crime group called Luzhnikovskaya (Luzhnikovs).
The connection between Baum and Babakov can be traced through the structures of the russian-Ukrainian group VS Energy, where Baum worked as a top manager. Until 2021, it was controlled by russian businessmen Alexander Babakov, Evgeny Giner, and Mikhail Voevodin.
VS Energy in Ukraine controls several energy companies. These are Zhytomyroblenerho, Zakarpattyaoblenerho, Kirovogradoblenerho, Khersonoblenerho, Rivneoblenerho, Chernivtsioblenerho, and Khmelnytskoblenerho.
But this is not the only connection between Baum and Babakov. In 2006, there was a loud scandal associated with a raid on the Rus Hotel in Kyiv downtown.
“Mobile phones were confiscated from the hotel staff, and people were locked up. The intruders broke down doors and computers. The affair was supervised by Oleg Bolotov, the general manager of the Babakov-owned Premier hotel chain,” the journalists wrote at the time. And Boris Baum was mentioned as the chairman of the supervisory board of the First Investment Bank – allegedly, the agreement to buy the hotel with him had already been agreed.
As it turned out, Baum was not only a banker but also the owner of three offshore companies: Banita Limited, Himalita Limited, and Maslav Limited. In 2008, the Rus hotel complex was registered with these companies. Baum’s offshore companies are also involved in a criminal case of illegally withdrawing money related to VS Energy.
Another bright representative of the Luzhnikovs is Mikhail Spektor. Until 2015, he controlled virtually all activities of the russian group in Ukraine and was president of VS Energy. He is described in the media as a well-known crisis manager. He used to be a manager of Boris Baum as well.
Mikhail Spektor is also involved in gambling. Market representatives say that he was partnering a project with Pari Match in Africa.
Mikhail Spektor . Source: Focus.ua
How russian business acquires licenses in Ukraine during the war
Boris Baum has helped establish contact between Semiokhin, Karshkov, and Mikhail Spektor. Now, the latter is responsible for the success of 1XBet in Ukraine and promotes the interests of the russian founders of the project.
Spektor hired Serhiy Tsybin as a nominal owner and manager for the legal entity Your Betting Company LLC to receive a license for 1XBet. Serhiy Tarasyuk, a lawyer, was involved in the licensing process.
In KRAIL, Spektor had Baum’s support. And at the beginning of the year, this would be enough to get licenses. But the documents for applying for one license were ready only in February, and for the second one in March 2022. So, the war adjusted the plans.
It became much more difficult for the russian brand to enter the Ukrainian market officially. To promote the issue of a license for 1XBet in KRAIL, Boris Baum said that after receiving the license, they undertake to buy military domestic government bonds for 500 million hryvnias. And it worked. On March 30, the regulator issued licenses for bookmaking and organization of online gambling to Your Betting Company LLC.
After the desire to buy military bonds, one would like to believe that the “Ukrainian” 1XBet is indeed Ukrainian and has nothing to do with the russians Semiokhin and Karshkov. But there is an aspect.
From 1XBet, another proposal was to allow accepting bets from non-resident players of Ukraine and to introduce preferential taxation for such activities. For spending money of non-residents through Ukrainian companies, the bookmaker is ready to pay 3% of turnover to the budget and buy domestic government bonds for 20% of profits.
It would seem that another initiative was aimed at the country’s economic development during the war. Such a proposal attempts to cover the long-standing pain of Semiokhin and Karshkov associated with activities in different markets. One of the world’s most popular gambling licenses is the Curacao license. There are two types: Master license and Sublicense. The first allows one to self-issue Sublicenses to third parties. 1XBet has been trying unsuccessfully to obtain a Master license for many years. This significantly limits the company’s ability to build a network of partner brands.
As an alternative, the founders of 1XBet came up with another scheme: to enter new legal markets and create conditions similar to the Master license. Such an attempt is currently taking place in Ukraine. By working with non-residents, 1XBet could expand its operations worldwide and launder funds from operations conducted outside Ukraine. The receipt of this proposal by KRAIL indicates the connection of the Ukrainian 1XBet with Semiokhin and Karshkov.
Unlike KRAIL analysts, the Kyiv Prosecutor’s Office noticed the connection between Your Betting Company LLC and “international russians.” According to our information, investigators suspect Your Betting Company LLC of fraud and financing actions aimed at changing the borders of Ukraine. Criminal proceedings in this regard were opened in April 2022.
But this is not enough. We believe that the Security Service of Ukraine and the National Security and Defense Council of Ukraine should intervene in the situation. After all, this is a shame for Ukraine, which discredits our struggle – when russian business gets the green light in Ukraine simply during the most challenging tests for our country and people. This shameful act must be abolished. As always, we will do everything to ensure that the Luzhnikovs go to Luzhniki, and the russians, to begin with, fail another plan to build a network of agents of influence in Ukraine.
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