Igor Runets, the founder of BitRiver, was moved from house arrest to a pre-trial detention facility in Russia, as revealed by CoinDesk. The move comes after he was charged with large-scale fraud for allegedly failing to deliver $8 million worth of crypto mining equipment he promised in a contract with a local company. The contract was reportedly signed with Infrastructure of Siberia, an important player in the region's industrial landscape.
The failed contract and the damage
Russian investigators claim that Runets caused more than 1 billion rubles—about $12.5 million—in losses by not fulfilling the contract for mining equipment. The company in question, Infrastructure of Siberia, is a subsidiary of En+, a powerful industrial conglomerate that contributes 5% of the world's aluminum production. En+ also oversees several projects in digital infrastructure, including those connected to crypto mining. Runets signed the contract in 2023, but according to the allegations, it was never completed, causing substantial financial loss to the company.
A crypto mining pioneer in decline
Runets is considered a major figure in Russia's crypto mining industry. He started building a large-scale data center in Siberia in 2017, the same year he founded BitRiver. Through years of expansion, he developed 15 data centers, which together operated more than 175,000 servers. However, the company's growth was severely hindered. A regional ban that prohibits crypto mining for six years across 10 regions has dealt a heavy blow to operations, and ongoing financial difficulties have further weakened the firm's stability. In February, a regional arbitration court initiated insolvency proceedings against Group of Companies Fox, the entity that controls 98% of BitRiver’s shares.
Before the current fraud charges, Runets was already placed under house arrest in February due to three prior charges of tax evasion. With the company now facing both financial and legal challenges, Runets is being held in a pretrial detention facility while the case prepares for trial. These combined pressures have left BitRiver struggling in a highly competitive industry, with its once-dominant Siberian operations now in turmoil.