BitRiver Faces Bankruptcy as Founder Arrested Amid Sanctions

The Arbitration Court of Sverdlovsk Oblast initiated bankruptcy observation against Group of Companies Fox on January 27, a move with dire implications for BitRiver, as Fox controls 98% of the mining firm’s authorized capital. This legal action stems from a claim filed by Infrastructure of Siberia, an En+ Group subsidiary, which alleges it paid BitRiver over $9.2 million (700 million rubles) in advance for equipment that was never delivered. According to reports in Kommersant, the Russian paper of record for corporate affairs, enforcement proceedings failed to recover these assets, prompting the insolvency filing.

Simultaneously, BitRiver’s leadership is in turmoil. Founder and Chief Executive Igor Runets was placed under house arrest last week by a Moscow district court on charges of tax evasion, as reported by local media. This dual-front legal assault—targeting both the corporate entity and its key executive—has crippled the company’s ability to mount an effective defense or manage its deteriorating operations.

Beyond the primary $9.2 million dispute, BitRiver’s financial distress is widespread. Court records accessed via the company’s state registration number reveal that Rosseti Siberia is seeking to recover approximately $60,000 (5.4 million rubles) in unpaid electricity bills from Management Company BitRiver. Furthermore, the company’s operational dysfunction is starkly evident in its failure to meet basic legal requirements. A January 23 ruling from an Irkutsk court returned an equipment recovery case after plaintiffs, linked to BitRiver, twice failed to provide essential documentation like equipment valuations and proof of ownership, despite deadline extensions.

This administrative breakdown is systemic. Court notices sent to BitRiver addresses were returned unclaimed after seven days, indicating a lack of operational presence. These failures align with local reports of mass executive departures and office closures. The company’s social media accounts have remained inactive since early 2022, painting a picture of a business that has functionally ceased normal operations. The freezing of accounts linked to BitRiver companies, as part of the dispute with Infrastructure of Siberia, has likely paralyzed any remaining business activity.

BitRiver’s current crisis is inextricably linked to international geopolitics. In April 2022, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned BitRiver and ten of its Russia-based subsidiaries, marking the first time the U.S. government targeted a cryptocurrency mining company. The sanctions, enacted following Russia’s invasion of Ukraine, placed the firm on the Specially Designated Nationals list, severely restricting its access to the global financial system and imported equipment.

The Treasury Department stated that BitRiver’s business model helped Russia ‘monetize its natural resources’ by operating large-scale server farms that sold mining capacity internationally. While the model leveraged Russia’s cheap energy and cold climate, the U.S. agency noted its inherent vulnerability: a heavy dependence on imported equipment and international fiat payment channels. The 2022 sanctions effectively severed these lifelines, setting in motion the operational and financial collapse now culminating in bankruptcy proceedings. The frozen assets and inability to engage in international commerce reported in the current disputes are a direct consequence of this sanctions regime.