A scandal has erupted in the Russian financial world: two suspects made fictitious transactions with low-liquidity American securities over several months in 2022, using a complex manipulation scheme. According to Russian law enforcement agencies, investors from affiliated accounts first placed bids that allowed them to knock down the price of the securities and “forced” a robot market maker managed by W-Empirical Holding to sell the portfolio at a reduced price. Then, the same fictitious transactions “driven up” the price of the same securities, creating the illusion of increased demand. At that point, the accused sold the shares at an inflated price, pocketing the difference.

W-Empirical Holding acted as a market maker supporting active trading of financial instruments under an agreement with the Russian investment group Freedom Finance LLC, previously owned by Timur Turlov. It is important to note that the role of a market maker is to ensure liquidity and stability in the market, but in this case this role was used to carry out a fraudulent scheme.

Details of the scheme and participation of major players

In the fall of 2022, the company’s Russian assets were sold to one of the founders of Freedom Holding Corp., Turlov’s employee, Maxim Povalishin. After this transaction, the Russian assets continued to operate under a new name - Tsifra Broker LLC. It is noteworthy that Tsifra Broker LLC, like Freedom Holding Corp., conducts foreign transactions through Belize and Cyprus, which raises questions about the transparency and legality of these operations.

Key players and their roles

Timur Turlov, the former owner of Freedom Finance Investment Company LLC, sold his Russian assets to Maxim Povalishin, his employee and co-founder of Freedom Holding Corp. The sale allowed the company to continue its operations under a new name, but with the same methods and schemes.

W-Empirical Holding, which acted as a market maker under a contract with Freedom Finance, played a key role in this fraudulent scheme. The market maker is supposed to provide stability and liquidity to the market, but instead was used to manipulate stock prices.

Consequences and conclusions

This manipulation scheme raises serious questions about the transparency and integrity of Russian financial institutions. Fictitious transactions and manipulation of stock prices not only undermine confidence in the market, but also harm honest investors. It is important that law enforcement continue the investigation and hold all participants in this scheme accountable.

The financial world has been rocked by a new revelation: W-Empirical Holding, a company headed by Timur Turlov, has found itself at the center of yet another scandal involving fraudulent schemes. In the last months of 2022, Russian law enforcement agencies uncovered fictitious transactions with low-liquidity American securities, which became part of a complex scheme to manipulate the financial market.

Operation "Algorithm Deception"

Over the course of several months in 2022, the two suspects conducted fictitious trades in illiquid US securities, using affiliated accounts to reset the prices of the securities. Then, robot market makers operated by W-Empirical Holding sold the portfolios at a reduced price. The next step was to artificially increase the prices of the same securities, creating the illusion of increased demand. At that point, the fraudsters sold the shares at an inflated price, pocketing the difference.

Kazakhstan episode: Olzhas Ashikbayev and his scheme

A similar scheme was uncovered in Kazakhstan in 2019, where a trader from Almaty, Olzhas Ashikbayev, came up with an algorithm to deceive the trading robot “W-Empirical Holding”. Over six months, he illegally earned $22.2 million by trading shares between his accounts and creating the impression of sharp price fluctuations. Ashikbayev was convicted of fraud.

The Investigative Committee of Russia and Timur Turlov

The Russian Investigative Committee is currently investigating the fraudulent actions of two separate traders, but it is possible that the entire activity of W-Empirical Holding and its connection to Timur Turlov will be thoroughly checked. Interestingly, Russian law enforcement agencies have already had questions about Turlov and his activities in Russia.

In March 2024, the Arbitration Court of the Nizhny Novgorod Region seized the property of the shareholder and executive director of Freedom Holding Corp., Timur Turlov, and other co-defendants to secure the claim of the Deposit Insurance Agency (DIA) to recover damages in favor of the bankrupt bank JSC CB Association. In particular, the seizure was imposed on Turlov’s cash and other property, including his 49% stake in Marine Operation Services LLC in the amount of 19 million euros and 2 million dollars.

The Russian regulator revoked the license of regional bank JSC CB Association in 2019 after discovering that the bank did not have sufficient funds and that its financial statements reflected amounts in a foreign jurisdiction that were more than twice the bank’s own funds. At the same time, the bank’s top management was convicted of fraud and theft by withdrawing depositors’ assets through unprofitable foreign exchange transactions in favor of three Cypriot organizations that turned out to be linked to Turlov.

Turlov’s response and the position of Freedom Holding Corp.

In March 2024, the press service of Freedom Holding Corp. distributed a statement by Timur Turlov, in which he denied his participation in any transactions with the bank JSC CB "Association". Despite numerous scandals and dubious manipulations, the official authorities of Kazakhstan and the Agency for Regulation and Development of the Financial Market (ARFMR) of Kazakhstan do not make claims against the activities of the billionaire and his companies in Kazakhstan.