Cyprus & World News

Cyprus issues arrest warrant for bitcoin promoter Brewster

12 April, 2014

Cyprus police has issued an arrest warrant for Danny Brewster, founder and CEO of local bitcoin depositary institution Neo and payment service Bee (known collectively as Neo & Bee), following accusations of defrauding customers and racking up debts of about €1 mln.

The CEO, who skipped the country two weeks ago, has been named as a “person of interest” in an investigation of the troubled Cyprus-based bitcoin savings and payment network, while three formal fraud charges have been filed against Brewster, law enforcement sources told the Cyprus Mail newspaper.
Police is also expected to issue a European warrant for Brewster’s arrest.
Neo & Bee is at the centre of a growing controversy after its CEO abruptly departed the country earlier this month, allegedly seeking investment to keep the company afloat. He later posted online messages saying that threats were targeted at his daughter and would not return to the island, while local police said no such complaint had been filed.
Brewster has been accused of fraud by two customers saying that they paid €15,000 and €20,000, respectively, for bitcoins they never received.
Problems for Neo & Bee first began when questions regarding the company’s solvency were first raised earlier this month, the bitcoin news site said.
Neo & Bee first opened to a good deal of enthusiasm in the community, with some commentators hailing the opening of the bank-like company as a step forward for popular acceptance of digital currencies.
These problems worsened when tradeable shares for LMB Holdings, the UK-based company that owns Neo & Bee, plunged in value on the Havelock Investment exchange.
Brewster, whose exact location is unknown, has said in the past that he plans to sell his equity in the company. It remains unclear whether or not the arrest warrant will change the calculus of any sale of his stake.
The Financial Mirror has learned that Brewster, who threw a smokescreen a few weeks ago by agreeing to pay some €35,000 in duties to import his Bentley, has racked up debts of nearly €1 mln arising from a major marketing campaign, employing nearly 20 staff and developers, renting shop space and buying office furniture.
It is not known if Brewster has access to the nearly €3 mln worth of bitcoins that LMB maintains.
The Cyprus Mail reported the story on the cover of its Saturday edition, with the headline “Where is Neo?” a word-play on the promotional campaign of “Who is Neo?” aimed at raising public interest in Cyprus about virtual currencies.