Vladimir Smerkis, the co-founder of Blum, a cryptocurrency venture rooted in Telegram’s Mini Apps, finds himself embroiled in legal turmoil. On May 18, 2025, Russian authorities detained Smerkis in Moscow over serious fraud allegations, raising eyebrows across the crypto community. The Zamoskvoretsky District Court has decided to keep him in custody as investigations unfold, according to reports from TASS, a state-owned news outlet.
Unpacking the Allegations
Smerkis, previously a key figure at Binance’s Russian operations, faces accusations of large-scale fraud under Article 159 of the Russian Criminal Code. The potential penalties are severe, with imprisonment ranging from two to 12 years. Although formal charges are yet to be filed, the gravity of the situation is palpable.
The Russian media, notably Mash, links these allegations to Smerkis’s past ventures—The Token Fund and Tokenbox. These projects, which he co-founded in 2017, reportedly left investors grappling with losses amounting to around $15 million. Yet, Blum, which is not involved with these ventures, was quick to distance itself, asserting via social platform X that Smerkis had resigned from his role as chief marketing officer and severed all ties with the project.
The Ripple Effect on Blum
Blum, a crypto project enabling decentralized trading and rewards via Telegram, is now under scrutiny. The community’s confidence appears to be wavering, particularly with respect to the much-anticipated BLUM token airdrop. An April 3 announcement hinted at a token listing in Q3 2025, sparking excitement among users eager to convert their Blum points—earned through a novel Drop Game—into tokens.
However, Smerkis’s arrest casts a shadow over these plans. The incident has set the community abuzz with speculation and concern. “Blum owes its users a clarification on the planned airdrop,” one vocal community member asserted on X. Meanwhile, RK Gupta, a well-known crypto influencer, lamented the radio silence: “No airdrop. No updates. Just silence. Was it all for nothing?” This echoes the recent turmoil seen in the Movement Labs scandal, where community trust was similarly shaken.
Implications for the Crypto Ecosystem
The unfolding drama raises broader questions about the stability and governance of emerging crypto projects. Blum’s situation underscores the challenges startups face in maintaining trust and transparency, particularly when key figures become entangled in legal issues. The crypto world, volatile as it is, depends heavily on user confidence and the perceived integrity of its operators. For a deeper understanding of the consequences of legal issues on crypto projects, see our coverage of the Mango Markets case.
Industry analysts suggest that while Blum may weather this storm, the project must act swiftly to reassure its community. “In the crypto space, trust is currency,” noted Maria Ivanov, a blockchain expert based in St. Petersburg. “Blum needs to communicate openly about its path forward to avoid long-term reputational damage.”
Looking Ahead
As the legal proceedings against Smerkis progress, the future of Blum’s initiatives hangs in the balance. The crypto market, ever-watchful for the next big innovation—or scandal—will be closely monitoring how this situation develops.
For now, the air remains thick with uncertainty. Will Blum’s leaders manage to steer the ship through turbulent waters, or will Smerkis’s legal woes prove to be an insurmountable obstacle? The coming weeks could be pivotal in determining whether Blum’s ambitious plans can continue unfettered or if they will stall in the wake of controversy.
Source
This article is based on: Russia arrests Blum co-founder Vladimir Smerkis on fraud charges
Further Reading
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
