Kidnappers release cryptocurrency boss after receiving £750,000 ransom in bitcoin

An executive of a UK-registered cryptocurrency exchange kidnapped in Ukraine this week has been released after paying a ransom of more than $1m in bitcoins, according to an adviser to the Ukrainian interior minister, in a crime he dubbed “bitcoin kidnapping and extortion”.

Pavel Lerner, who runs the Exmo exchange and is a locally-renowned cryptocurrency expert, was kidnapped near his office in Kiev on Tuesday but freed on Thursday, Anton Gerashchenko, the Ukrainian adviser, said.

“He was kidnapped by an armed gang for the purpose of extorting bitcoins,” Mr Gerashchenko told the Financial Times, adding: “We have operative information that he paid more than $1m worth of bitcoins.”

He said Mr Lerner was held for one and a half days, “then released in a state of shock. ... He got very lucky that he remained alive.”

Exmo Finance, which is registered in the UK with Companies House but also has operations in Ukraine, is one of more than 400 unregulated exchanges that have sprung up across the globe to cater for crypto capital markets.

Cryptocurrencies, which can be converted into real-world money anonymously, have long attracted criminal elements. But soaring prices mean that exchange venues have become an increasingly lucrative target for cyber criminals. The value of bitcoin, the most popular digital currency, has more than tripled in the past three months to trade around $14,750 today.

Last week, South Korean exchange Youbit was forced into bankruptcy after losing 17 per cent of its assets in a cyber attack.

The kidnapping of Mr Lerner, a Russian citizen, was first reported on Tuesday by local media, which said witnesses had seen him being bundled into a black Mercedes-Benz by people wearing dark clothes and balaclavas.

Exmo this week moved to quell concern that customers’ money was at risk, stating that all users’ funds were “absolutely safe” and that Mr Lerner’s job at Exmo did not “assume access either to storages or any personal data of users”. Although Mr Lerner’s LinkedIn profile describes him as CEO, Exmo reportedly told the BBC he was its analytics manager.

Exmo and Mr Lerner could not be reached for comment on Friday.

Ukraine’s National Police told the FT that a criminal case had been launched on Tuesday involving the alleged abduction of a foreigner in Kiev’s Obolon district, but would not confirm the identity of the victim.

Separately on Thursday, Exmo said on Twitter that it had been hit by a cyber attack, which meant its website was down temporarily.

While Exmo is not in the top handful of exchanges by market share, it has some 94,000 active traders and hosted trading of some $125m worth of bitcoin over the past 24 hours, according to its website.