Moscow Authorities Arrest Co-Founder of ‘Tap to Earn’ Crypto Game Blum

Moscow authorities arrested Vladimir Smerkis, co-founder of crypto game Blum and former head of Binance, as part of a fraud investigation. The Zamozkoretsky District Court has not released all of the details about Smerkis’ arrest. However, the court has permitted authorities to detain Smerkis under Article 159 of the Criminal Code, which relates to severe fraud cases under Russian law.

Smerkis could face 2 to 12 years imprisonment for financial crimes relating to Article 159 of the criminal code. It is not clear yet whether Smerkis will be formally charged, but he likely will. Russian outlets suggest that Smerkis may be facing charges related to his involvement in The Token Fund and Tokenbox projects, which he co-founded in 2017, and made considerable losses of $15 million. Blum, another project co-founded by Smerkis, distanced itself from Smerkis this week, pointing out that the co-founder is no longer involved with the project and that Blum is focused on their regular operations and will continue to offer their services without any interruptions. Blum is a crypto project that integrates into Telegram’s app market and provides a decentralized exchange.

Blum was a popular app that included ‘tap to earn’ features, such as a game that let you tap falling snowflakes on the screen and receive crypto rewards in return, which, according to the developers, could easily be redeemed for fiat currencies such as dollars. The ‘tap to earn’ craze was very popular when Blum started their project, contributing to the gamification of crypto rewards. Gamification is a marketing strategy developers use to encourage users to spend more time on their platforms, which often results in more sales. Smerkis usually specialised in marketing, especially with the various startups he co-founded. After the news of Smerkis’ arrest, Blum quickly announced that the co-founder has stepped down from his work for the crypto company. Blum announced this to their 5.3 million followers on X.

Hamster Kombat was a popular ‘tap to earn’ crypto game released in 2024. The game stood out from competitors because it offered a substantial air drop feature, attracting users from far and wide. The air drop feature was the largest in the industry. Developers in the ‘tap to earn’ game sector were interested in the evolving business model of crypto games and airdrop marketing ploys. However, regulators have also taken a keen interest in the gaming market and have started investigating whether the market could be subjected to gambling regulations. The project that Smerkis co-founded, Blum, fits within the context of this emerging sector and appeared not long after Hamster Kombat. CoinGecko suggests that the ‘tap to earn’ market is worth $511 million.

Blum was initially supported by Binance Labs with its builder accelerator program. Blum was released in May 2024. The game involves tapping falling snowflakes to earn rewards. Game users could accumulate Blum points and exchange them for currencies like crypto or fiat. Users of the game may be concerned with the recent news that Russian authorities have apprehended a Blum co-founder. Blum developers have tried to assuage fears that the incident will damage the project’s reputation. Meanwhile, news outlets are waiting for more details regarding the Smerkis case so that a clearer picture can emerge.