Customers of the online lottery site LottoPalace, which is officially operated by the companies of the meanwhile imprisoned German Uwe Lenhoff, have kept FinTelegram busy for months. Time and again, customers complain about withdrawal requests that have not been executed and also unauthorized initiated payments from their bank accounts. We’re not talking about little money here. We are in touch with customers who have deposited tens of thousands of Euros and who have had the corresponding credit balances on their LottoPalace accounts. Not to mention the high bonuses and winnings displayed in the customers’ dashboards. Payments are made only sluggishly and in some cases not at all as our cases show.
LottoPalace Customers Asked To Wire Money To Coinbase
While studying the various complaints, FinTelegram recently stumbled upon a new aspect of the LottoPalace scheme. Some customers were asked to deposit funds into the account of a CB Payments Ltd held with the Estonian LHV Pank. Now this CB Payments is a subsidiary of Coinbase Global Inc in the U.S., the operator of the crypto exchange www.coinbase.com. CB Payments itself is a payment service provider regulated by the UK Financial Conduct Authority (FCA) working exclusively for Coinbase and its customers.
Question: What is LottoPalace doing with crypt currencies and why should LottoPalace customers deposit to a CoinBase account? We asked but did not receive answers from LottoPalace. Hence, we did our own research and established our hypothesis.
Deposits at CoinBase are usually made by people who want to buy cryptocurrencies at CoinBase with FIAT money. LottoPalace has apparently used CoinBase to launder customer funds and make them disappear from the banking system. No other explanation can be found. The customers we interviewed were not even aware that they were actually wiring their money to CoinBase. For them, CB Payments Ltd was simply a “normal” payment service provider. The customers had to specify CBAEURUHHHJEFKH as the reference. One IBAN
Money Laundering Via CoinBase And Crypto?
On the grounds of the procedure and the documents available to us, the following cash flow can be assumed:
- FIAT to CoinBase: LottoPalace customers deposit FIAT funds into LottoPalace accounts with Coinbase;
- FIAT to cryptocurrencies: FIAT funds are converted into cryptocurrencies removing the traceable FIAT funds from the banking system;
- Cryptocurrencies transferred: The cryptocurrencies are then transferred to wallets with other crypto exchanges and converted into FIAT money again;
- New FIAT money and operator: FIAT money from the sale of cryptocurrencies is transferred to a bank account of another beneficial owner and laundered into the banking system as clean money.
With this scheme applied the trace of the money of the LottoPalace customers is for the most part blurred. We have developed this as a hypothesis based on the documents and information provided to us by customers. Final verification of this hypothesis is pending. We already reached out to Coinbase. In any case, this Coinbase connection raises another big red flag for customers.
The interesting question is whether Coinbase and CB Payments respectively are aware of this LottoPalace approach. Coinbase is a US company and they are known to be particularly sensitive about money laundering. If it turns out that CoinBase was used by the Lenhoff/Veltyco network for illegal transactions, then this case will take on a new dimension – a US dimension.
No More Monies For Veltyco?
The documents submitted to us by LottoPalace customers and the correspondence with LottoPalace employees (an Oliver Seidel or Manuel Friedrich) prove that apparently no or only very selective payments are made to customers. But it also seems that Veltyco no longer gets any money from LottoPalace.
LottoPalace is officially operated by Altair Entertainment N.V. and
In total, the Lenhoff group of companies allegedly owe Veltyco EUR 10.9 million. Veltycy has announced that it intends to take legal action to recover the overdue receivable balances owed by the Lenhoff companies. It is doubtful whether these collection measures will be successful in view of Lenhoff’s arrest.
Given the difficulty in receiving funds from the Group’s lottery vertical, the Board is restructuring these operations to engage an alternative operator. Following the restructuring, the Board is proposing to invest in the marketing of the Group’s relaunch of its lottery vertical expected during Q2 2019.Veltyco press release, Jan 30, 2019
Looks as if the Veltyco board plans to substitute Altair Entertainment and