Business & Economy

Bitcoin promoter breaks silence on Cyprus fraud allegations

17 April, 2014

Danny Brewster, CEO of the defunct Cyprus-based bitcoin promoter Neo & Bee, has broken his silence, taking to the social networking site reddit to respond to allegations that he defrauded investors and skipped the country, racking up about 1 mln euros in debts.

Posting on the forum as ‘cryptocyprus’, the British-born entrepreneur said the suggestion he has committed fraud is his “greatest concern” at the moment, according to a report on the bitcoin news site Coindesk.
Earlier this month, news reports suggested that two customers paid Brewster 15,000 euros and 20,000 for bitcoins, which they claim they never received.
Further allegations then started flying, claiming Brewster had left Cyprus and defrauded investors, leaving staff and developers unpaid, as well as other costs such as rent, office equipment and promotion, all adding up to about 1 mln euros.
Brewster took to the Bitcoin Talk forum over the weekend to defend himself and admitted he was out of the country, but stressed that he was away on business. In other comments, he had said that he left the country after threats were made on his daughter’s life, while local police, that have an outstanding arrest warrant for Brewster, said he never filed a criminal complaint.
In his reddit post, Brewster said that he sold bitcoins to a number of people prior to Neo & Bee opening to the public, with four of these people requesting that he hold their bitcoins until they provide him a wallet address to send them to.
“Sorry to disappoint those that believe the tales that I simply took them…. The keys are still stored on paper. The total sales to these four people amounts to 75.29270138 BTC which were purchased for a combined total of EUR 35,213.57, so I have no idea where the values reported in the media have been derived from,” Brewster’s reddit post continued.
It added: “I have not received one single request from the individuals who bought the bitcoins from me to send the coins to an address they provided. With one exception, a request was made but that was received from the individual that introduced one of the buyers to me, they requested for me to transfer the coins to his Bitstamp account.”
“I didn’t send the coins to his address as he was not the person that I had the agreement with. One of these people went directly to the police following rumours that I had fled the country.”
Brewster claims he has been trying to contact the Criminal Investigation Department of the police in Cyprus for days via both phone and email, but they have not responded. Police sources told the Financial Mirror that they have not been contacted in the past few days.
Brewster added that he did not return to Cyprus immediately following the issue of an arrest warrant, because:
“1. I have a family funeral to attend.
“2. The whole situation can be resolved without me doing so.
“3. The manner in which the investigations are being carried out are concerning, the police haven’t made an attempt to contact me despite numerous personal requests for them to do so.”
Brewster suggested that the four customers provide their wallet addresses to the police, who can then forward this information to him. He has instructed a lawyer in Cyprus to facilitate this process. He did not name the lawyer.
Brewster’s reddit post, titled ‘The full picture from Danny Brewster’, continued by explaining a few facts about his personal circumstances.
It claims he had enough bitcoins in the failed Tokyo-based bitcoin exchange Mt. Gox to pay back all of Neo & Bee’s creditors in full, but now that the exchange closed down, he did not have access to any of those funds.
He also confirmed he bought a Bentley in December, which is still in Cyprus. He said he had planned to sell the car this summer, reinvesting the profit into Neo & Bee. Now he will sell the car and put the money towards satisfying the company’s creditors.
“I am concentrating first and foremost on resolving the issues with Cypriot police including my planned return to Cyprus. Only then I will concentrate all of my time on resolving everything surrounding Neo and Bee,” his post concluded.

Cyprus police issued an arrest warrant last week for 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 euros. (SEE: )
The CEO, who skipped the country two weeks ago, was 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, according to a report in the Cyprus Mail.
Police is also expected to issue a European warrant for Brewster’s arrest.
Problems for Neo & Bee first began when questions regarding the company’s solvency were first raised earlier this month, the bitcoin news site Coindesk said.
Neo & Bee first opened to a good deal of enthusiasm, 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 still 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 euros in duties to import his Bentley, has racked up debts of nearly 1 mln euros 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 euros 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.