Blum Co-Founder Vladimir Smerkis Arrested for Crypto Fraud

Ex-Binance CIS head faces criminal charges tied to $15M ICO-era losses and prior crypto ventures

Vladimir Smerkis, a prominent figure in Russia’s cryptocurrency scene and co-founder of the Telegram-based game Blum, has been arrested on serious fraud charges stemming from past crypto investment platforms. The case has rocked the local Web3 community and put a spotlight back on unresolved issues from the ICO boom era.

Former Binance Executive Faces Criminal Probe

The Zamoskvoretsky District Court in Moscow approved the detention of Vladimir Smerkis on May 18, 2025, following his arrest on charges related to large-scale fraud. Russian state outlet TASS reported that the case falls under Article 159 of the Russian Criminal Code, which pertains to financial theft and could carry a prison sentence of 2 to 12 years if Smerkis is convicted.

Authorities allege that Smerkis defrauded investors through earlier ventures that preceded his involvement with Blum. The charges reportedly trace back to his roles in two investment projects launched during the ICO boom of 2017: The Token Fund and Tokenbox. These platforms promised users streamlined access to cryptocurrency markets but later collapsed, resulting in estimated investor losses of $15 million.

Russian prosecutors claim the projects were poorly managed and lacked regulatory safeguards, raising concerns about potential misrepresentation or misleading investor communications. Although these platforms are no longer operational, the fallout continues to affect perceptions of executive credibility in the crypto sector.

Smerkis’s Rise and Fall in the Web3 Ecosystem

After the collapse of Tokenbox, Smerkis transitioned to a high-profile role as regional director for Binance in the Commonwealth of Independent States (CIS). His stature grew as Binance expanded operations in the region, though his tenure was relatively short-lived.

More recently, he re-emerged as co-founder and Chief Marketing Officer of Blum, a Telegram-integrated crypto game that launched in 2024. Backed initially by Binance Labs through its Most Valuable Builder accelerator, Blum quickly gained traction due to its viral mini-game, “Drop Game,” which allowed users to earn “Blum Points” by tapping falling snowflakes. These points were promoted as redeemable for the upcoming BLUM token airdrop, slated for Q3 2025.

The arrest has prompted immediate distancing from the project. In a statement posted to X (formerly Twitter), Blum announced that Smerkis has stepped down and is no longer involved in any capacity:

“Vladimir 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,” the team stated.

Blum further emphasized that the project’s roadmap remains unchanged, including the planned token distribution later this year.

ICO Ghosts Still Haunt the Industry

The charges against Smerkis highlight the lingering consequences of the 2017 ICO bubble, during which many blockchain startups raised millions with minimal oversight. Tokenbox and The Token Fund were among numerous platforms that capitalized on the then-nascent investor appetite for crypto exposure but ultimately collapsed under the weight of poor governance and weak fundamentals.

Though Smerkis’s more recent projects, like Blum, were not directly involved in the older ventures, the renewed legal scrutiny has revived concerns about accountability and long-term due diligence in crypto leadership roles.

Legal Trouble Grows for Crypto Executives Globally

Smerkis is not alone in facing serious legal fallout. His arrest is part of a broader global trend of regulatory crackdowns on crypto leaders accused of fraud and mismanagement.

Notable Recent Cases Include:

• Jonathan Mills, founder of the Hashling NFT project and CEO of Satoshi Labs LLC, is being sued in Illinois for allegedly misappropriating $1.46 million in investor funds from failed NFT drops on the Solana and Bitcoin blockchains. The civil lawsuit, filed on May 14, accuses Mills of fraud, breach of fiduciary duty, and unjust enrichment.
• Alex Mashinsky, the former CEO of Celsius Network, was sentenced on May 8 to 12 years in prison by U.S. District Judge John Koeltl. Mashinsky had pleaded guilty to defrauding hundreds of thousands of customers by falsely promising high yields on crypto deposits. His conviction marked one of the harshest penalties in the crypto space to date.
• Daniel Schatt and Joseph Podulka, former executives of collapsed crypto lender Cred LLC, also pleaded guilty to wire fraud in connection with the firm’s bankruptcy in 2020. As part of a U.S. Department of Justice probe, they admitted to misleading stakeholders about the company’s financial state, which contributed to its downfall.

These cases underscore a widening legal net around crypto fraud, particularly involving projects that failed to deliver on promises or used investor funds for unauthorized purposes.

What’s Next for Blum and the Industry?

Despite the controversy, Blum appears determined to push forward. The team has reiterated that the BLUM token airdrop remains on schedule, and there are no planned changes to its roadmap. However, investor sentiment may take a hit as confidence in crypto leadership continues to erode under mounting legal challenges.

The situation also reignites debate around whether crypto projects should be held to higher governance and compliance standards, particularly in emerging markets where regulation is still evolving. As digital asset platforms move into more mainstream adoption, the consequences of past misconduct—whether from ICO-era schemes or modern NFT projects—are coming into sharper focus.

Conclusion: A Warning Sign for the Crypto Ecosystem

The arrest of Vladimir Smerkis serves as a sobering reminder that past actions in crypto do not remain buried forever—especially when investor losses are involved. As regulatory scrutiny intensifies worldwide, both emerging and established players are being held to account for earlier ventures that skirted transparency and accountability.

With Blum continuing without one of its original architects, the crypto community is watching closely to see whether it can maintain momentum—or whether this high-profile scandal will leave a lasting dent in its credibility. In the meantime, the pressure is mounting on all crypto founders to ensure clean histories, clear governance, and full transparency—before the law comes knocking.