Malta’s new frontier: Kazakhstan

Malta-based broker Exante has signed a deal in Kazakhstan to develop the ex-Soviet nation’s untapped cryptocurrency market, a move that aligns with the government’s strategy on digital currencies.

Last October, Exante announced it had signed a deal of cooperation with Kazakhstan’s government-supported Astana International Finance Center (AIFC). Exante said it would work with the AIFC to develop the ex-Soviet nation’s untapped cryptocurrency market – cryptocurrency is a digital currency operating independently of a Central Bank.

A few months before the firm signed the agreement, Prime Minister Joseph Muscat had announced a national strategy to make Malta “the Bitcoin continent of Europe” (Bitcoin is a cryptocurrency). Many had questioned Muscat’s sudden interest in cryptocurrencies.

The company’s top men have been treated like royalty in Malta in recent years despite an investigation by US Securities and Exchange Commission on “one of the largest financial cybercrime networks of all times”.

The name of Exante’s CEO, Alexey Kirienko, matches that which appeared in a list of over 2,000 people who became Maltese citizens which was published last month. There is no way of distinguishing citizenship buyers from those who earned citizenship outside of the cash-for-passports scheme.

Soon after the general election last year, Alexey Kirienko, and Exante’s co-founder, Anatoli Knyazev, were guests of the Prime Minister, “to discuss the rise in cryptocurrencies and to discuss the launch of Exante’s cryptocurrency trading”, according to the company’s web site.

One of the first things the newly-appointed Parliamentary Secretary responsible for Financial Services, Digital Economy and Innovation, Silvio Schembri, did last July was to visit the company’s offices.

The firm’s relationship with the country’s top brass started long before then. President Marie Louise Coleiro Preca hosted an exclusive dinner at Verdala Palace for Exante on December 5, 2015, when the company was still being investigated by the US Securities and Exchange Commission (SEC).

Its CEO – Alexey Kirienko – sat next to President Marie Louise Coleiro Preca at the dinner, as photos uploaded to the company’s web site show.

At the time, claims against the company had been dismissed in Malta but the US investigation was still ongoing. It was one of a number of events in which the President met the company’s members.

The Shift asked the President whether she was aware of the ongoing investigation at the time she was hosting the company members for an exclusive dinner. “Kindly refer your questions to the relevant authorities, as to the Foundation’s knowledge, the company in question is regulated by the MFSA, and also quoted on the Malta Stock Exchange,” a spokesman said.

In October 2015, only two months after news of the allegations by the SEC involving Exante emerged, Attorney General Peter Grech and local government bodies dropped criminal and civil allegations against Exante and its directors. But the US SEC investigation was still ongoing.

The US SEC dismissed its claims against Exante in February 2016, but company insiders were still embroiled in the charges. Among the groups named as profiting in the insider trading scheme in the initial charges was Global Hedge Capital Fund.

According to the SEC, Exante and Global Hedge share common directors and employees, with Exante’s CEO and founder Alexey Kirienko having established Global Hedge in 2007, according to the international online trading knowledge hub Finance Magnets.

The US SEC filed fraud charges against over 30 people for allegedly taking part in a scheme to profit from stolen insider information about corporate earnings announcements.

The international cybercrime ring, composed of two Ukrainians hackers and dozens of traders around the world, allegedly broke into newswire services to obtain the information, generating more than $100 million in illegal profits.

Exante had said in a statement that a lack of understanding on its business model was the main reason for the allegations. But nine of its brokerage customers were charged for alleged illegal trading through a brokerage account held in Exante’s name.

In October 2016, Exante changed its name to XNT Ltd, according to MFSA records. It maintained its registered address at Portomaso Towers. The Ultimate Beneficial Ownership (UBOs) is registered in the British Virgin Islands and the Cayman Islands.

On December 29, a few days after the name Alexey Kirienko appeared on the citizenship list, another company was set up in Malta called XNT Finance Plc at the same Portomaso address. The company’s main shareholder is Lartemisis Holdings PLC also registered at the same address.

Lartemisis directors are the same names behind XNT: Alexey Kirienko, Anatoli Knyazev and Gatis Eglitis. The shareholding of the new company is held by Pacific Liberty (Cayman Islands) and Nations Development Group Ltd (British Virgin Islands).