Russian mining giant collapses! BitRiver CEO flees tax evasion and is arrested, employees unable to get paid

BitRiver founder Igor Runets has been arrested and faces three charges of tax evasion, and was placed under house arrest on Saturday. BitRiver is Russia’s largest mining company, but after U.S. sanctions in 2022, it experienced a series of collapses: in 2023 SBI withdrew its investment, in 2024 wages were unpaid, and in 2025 it faced equipment fraud lawsuits.

Three Tax Evasion Charges Directly Targeting $230 Million Net Worth

Igor Runets is accused of concealing assets to evade taxes, facing three separate charges. Documents from the Zamoskvoretsky Court in Moscow show that Runets was charged on Saturday and ordered to be under house arrest on the same day. Such rapid judicial proceedings are relatively rare in Russian tax evasion cases, typically indicating that prosecutors have sufficient preliminary evidence and are concerned about the defendant fleeing or destroying evidence.

The house arrest order’s enforcement details are extremely strict. Runets will be confined to his home throughout the case, not allowed to leave his residence, use phones or the internet (except for legal consultations), and must regularly report to law enforcement. The legal team now has only a very short window to appeal the house arrest, as it will fully take effect by Wednesday. If the appeal fails or is not filed, Runets will lose his personal freedom for the duration of the case.

By the end of 2024, Bloomberg reported that Runets’s net assets reached approximately $230 million due to his involvement in cryptocurrency mining. This wealth made him one of the richest entrepreneurs in Russia’s crypto industry. However, this fortune now faces confiscation risks. Russian tax authorities have the power to freeze all assets of the accused in tax evasion cases and confiscate property equivalent to the evaded taxes upon conviction. Considering the three separate charges, the involved tax amounts could be enormous.

Details of the tax evasion charges have not been fully disclosed, but media reports suggest they relate to BitRiver’s corporate structure and income reporting. Russian tax authorities may have discovered that Runets concealed income from mining operations through offshore companies or complex legal structures, or underreported company profits to reduce tax liabilities. Such allegations are not uncommon in the crypto industry, as the cross-border nature of Bitcoin mining and the digital form of income provide opportunities for complex tax planning.

Chain Reaction After U.S. Sanctions

BitRiver’s problems are mounting. Since being sanctioned by the U.S. Treasury in mid-2022 due to the Russia-Ukraine conflict, the company has faced numerous challenges. The U.S. Treasury placed BitRiver on the Specially Designated Nationals (SDN) list, prohibiting U.S. persons or companies from conducting any business with it and freezing all its assets within U.S. jurisdiction. This sanctions regime has dealt a devastating blow to BitRiver’s international operations.

In May 2023, one of its major clients, Japanese banking giant SBI, withdrew from Russia due to ongoing conflicts and U.S. sanctions pressure, ceasing to use the company’s infrastructure for Bitcoin mining. SBI was one of BitRiver’s most important institutional clients, and its withdrawal directly caused BitRiver to lose most of its stable income sources. This also illustrates the secondary effects of U.S. sanctions: even non-U.S. companies avoid cooperation with sanctioned entities due to risk.

The Business Daily reported that starting late 2024, BitRiver began cutting costs and scaling down operations across the company, followed by delays in paying employee wages. Wage arrears are a typical sign of severe financial distress. In Russia, labor laws strictly regulate wage payments, and delays can lead to criminal liability. BitRiver’s willingness to take this risk indicates its cash flow has deteriorated to the point of being unable to sustain normal operations.

Timeline of BitRiver’s Collapse

June 2022: Sanctioned by U.S. Treasury, listed on SDN

May 2023: Major client SBI withdraws, losing stable income

End of 2024: Cost-cutting and wage delays

Early 2025: Faced two equipment fraud lawsuits from Siberian power supply companies

January 2026: CEO Runets arrested, facing three tax evasion charges

In early 2025, the company faced two lawsuits from Siberian power supply infrastructure companies, alleging that the company paid for equipment but never received it. These business disputes further damaged BitRiver’s reputation and financial health. The lawsuits not only seek repayment but may also pursue contractual fraud charges, providing clues for subsequent criminal investigations.

From Russian Mining Giant to Edge of Bankruptcy

Founded in 2017 during Bitcoin’s bull market peak, when crypto mining was booming, BitRiver leveraged Siberia’s abundant hydroelectric resources and extreme cold climate (reducing cooling costs) to grow rapidly into Russia’s largest Bitcoin mining firm. It not only operated its own mining farms but also offered hosting services for other companies, managing large data centers across Siberia, with total hash power once accounting for a significant share of the global Bitcoin network.

Russia has a unique advantage in Bitcoin mining. The country has some of the cheapest electricity in the world, especially in Siberia, where surplus hydroelectric power often goes unused. The frigid climate is also a natural advantage, with winter temperatures dropping to -40°C, requiring little additional cooling. These factors make operating costs in Russian mining farms far lower than in North America or Europe.

However, geopolitical risks ultimately destroyed these advantages. The 2022 U.S. sanctions severed BitRiver’s ties with Western clients and supply chains. Major global mining equipment manufacturers (like Bitmain and MicroBT) are reluctant to risk violating U.S. sanctions by selling equipment to BitRiver. Financial service providers also refuse to process transactions related to BitRiver, leaving it isolated.

SBI’s withdrawal was a fatal blow. The Japanese banking giant’s extensive mining operations in Russia, and its choice of BitRiver as a partner, were seen as endorsements of the company’s technical capabilities and operational reliability. But when the U.S. sanctions risk exceeded commercial interests, SBI did not hesitate to exit. The loss of this institutional client was not only a revenue hit but also a blow to reputation, prompting other potential clients to distance themselves.

From late 2024’s cost-cutting and wage delays, to early 2025’s equipment fraud lawsuits, and the arrest of CEO Runets in early 2026, BitRiver’s collapse exemplifies a classic corporate death spiral. Cash flow shortages lead to breach of contracts, lawsuits, and reputation damage, further worsening financial difficulties, ultimately attracting tax authorities’ investigations. Once this domino effect starts, it is nearly impossible to reverse.

Warning for Russia’s Crypto Mining Industry

The BitRiver case offers a profound warning for Russia’s entire crypto mining sector. The Russian government’s attitude toward cryptocurrencies has been inconsistent—hoping to utilize mining to absorb excess electricity and create jobs, but also wary of capital outflows and money laundering risks. The downfall of industry leader BitRiver may prompt regulators to tighten scrutiny over the entire industry.

Tax issues could become a new tool for Russia to crack down on crypto mining. Compared to outright bans, tax audits are more covert and harder to rebut. If Runets’s tax evasion charges are proven, Russian tax authorities might launch similar investigations into other mining companies, demanding back taxes and fines. This regulatory pressure could force many small farms to shut down or go underground.

For international investors, BitRiver’s collapse underscores the decisive impact of geopolitical risks in the crypto industry. No matter how successful a company is technically and operationally, falling into the geopolitical crossfire makes survival extremely difficult. U.S. sanctions cut off BitRiver’s international links, while Russian tax investigations internally dismantle its foundation. This double blow is deadly for any enterprise.