LottoPalace – Customer Complaints, Coinbase, And A Crypto Scheme

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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.

CB Payments business description( Source: Report and financial statements 2017)

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 given to customers is EE297700771001961370. Via IBAN and reference, CoinBase should be able to determine who this Coinbase account holder.

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:

  1. FIAT to CoinBase: LottoPalace customers deposit FIAT funds into LottoPalace accounts with Coinbase;
  2. FIAT to cryptocurrencies: FIAT funds are converted into cryptocurrencies removing the traceable FIAT funds from the banking system;
  3. Cryptocurrencies transferred: The cryptocurrencies are then transferred to wallets with other crypto exchanges and converted into FIAT money again;
  4. 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 Payific Ltd. According to the information available to us, both companies belong to the Uwe Lenhoff network. In 2016 he also founded the Veltyco Group, which is listed on the stock exchange. This, in turn, acts as a marketing company for LottoPalace and receives commissions for it. Or should at least receive commissions. Veltyco has announced that Uwe Lenhoff‘s Altair Entertainment owes the company EUR 1.6 million from the lottery business.

LottoPalace owes money to Veltyco

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 Payific with new LottoPalace operators.

  1. Mary Andrew says:

    Until Christmas 2018 I was sending money via your bank in Estonia ref CBAEURXAAAMLMA to purchase bitcoins originally. Bullwins were hassling me to keep sending more money which was being traded by someone I have been told, was not qualified to deal in large amounts. I was also told that I had to pay £50k for tax purposes which would be refunded on 20th. December 2018 as a non resident of the US. This did not happen due apparently to a major internet problem @ Coinbase but would be sent ASAP. My account with Bullwins was up to $1.6m and dramatically fell to $97352.6 due to reckless dealing. I am still awaiting the tax refund and the money on my account for which I have asked on several occasions. I have no money except my old age pension to live on as Bullwins has scammed me out of £400k. Is there any chance you could please help me recover my money which effectively has been stolen. Many thanks for your assistance.

  2. Carmen Fonta says:

    From August 2020 my father 87 years old was sending money via your bank in Estonia ref CBAEURXAAAMLMA to purchase bitcoins originally. A person with a telefon number from Cyprus were hassling him me to keep sending more money which was being traded by someone he has been told. He was also told that he had to pay up to 100.000 Euros which would be refunded at the end of this month. We are afraid that this will not happen due apparently to a major internet problem @ Coinbase but they said would be sent ASAP. He is awaiting for the money on his account for which he have asked on several occasions. He has no money except his old age pension, it seems that he has been scammed . Is there any chance you could please help him recover his money which effectively has been stolen. Many thanks for your assistance.

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