Kibo: the Entangled Tale of a Crypto Lottery


After our earlier feature on the accusations addressed to Kibo by some community members was published, ForkLog has undertaken its own investigation with experts, developers, lawyers and active members of the Russian-speaking cryptocommunity providing their assistance.

Disclaimer: This article shall not be considered any kind of an investment recommendation or anti-recommendation. ForkLog provides data from open sources to clarify the matters in regard of Kibo.

The same the article in question was published, ForkLog editorial board had a conversation with Kibo founders, Alexei and Andrei Miller, with both parties recording the conversation. Afterwards, the Kibo representatives have published the record on YouTube titling it “Forklog and its troll friends: a conversation between KIBO developers and Forklog administration.”

In order to make things clearer, we analyzed past activities of the project’s founders, and talked with several developers, including Andrei Zimin who claims to be participating in developing Kibo’s smart contract.

As a reminder, the link of the project with a Ponzi sheme OneCoin was among the arguments of those accusing Kibo of being a scam; however, ForkLog failed to unearth any serious supporting evidence for the claim. However, according to some community members, people currently involved in Kibo’s advertising had been earlier involved in OneCoin’s promotion. The Kibo representatives stated they can’t be held liable for each of the project’s partners.

Another argument of the users accusing Kibo of scam was the Miller brothers’ connection with MLM- projects like TeleksFree, WCM777 and iButler.

WCM777 aka Kingdom777

While talking with Kibo founders, ForkLog found out that the Millers were indeed involved in developing WCM777.

The Miller brothers confirmed they had been working for the company recruiting new customers. In particular, one of them told ForkLog via Skype:

“When we entered the MLM, we found a well-established company. There were lots of documents there, so that it would be clear: this company, this organizer, a Chinese person, he spoke in America after Al Gore at a presentation. One may easily see that. There was a [superb] legal substrate, a foundation doing all that. All the companies were [listed] on their website, there was no refutation, everything was very cool.”

On the videos below, Alexei Miller is also seen actively promoting WCM777, a Ponzi scheme later known as Kingdom 777.

Alexei and Andrei, participating in the promotion of WCM777, attended conferences in Hong Kong and other cities around the world. Remarkably, they were not founders of the project, but were engaged in investment and attracting new investors.

However, in March 2014, the company’s operations were halted by the U.S. Securities Exchange Commission. According to the release published at the SEC’s official website, WCM777 was a Ponzi scheme.

“According to the SEC’s complaint filed in federal court in Los Angeles, WCM and WCM777 have raised more than $65 million since March 2013 by falsely promising tens of thousands of investors that the return on investment in the cloud services venture would be 100 percent or more in 100 days. Investors were told they would receive “points” for making investments or enrolling other investors,” the litigation release reads.

The SEC stated that litigation was initiated as early as in March 2013, and came to an end a year later. Remarkably, the document states that WCM’s official materials explicitly proclaimed that the project was not a Ponzi scheme, and used MLM methods to reach a wider audience.

“On its website, WCM777 specifically addressed the question “Is WCM777 a Ponzi Game?” by writing, “In summary, we are not a Ponzi game company. We are creating a new business model,” the release goes on.

WCM777 aka Kingdom777 offered its investors to buy a new currency that would become very popular and expensive in the future. The currency’s units, according to the founders, would be converted into equity capital during IPO’s of major technological companies. In the video below, the Millers advertise WCM777 / Kingdom 777 by speaking of the project’s high yield.

The Kibo founders, in their turn, state:

“It’s unclear why they had been closed in America, but the thing is that an average person who got used to assessing a real business, has no way to assess whether this company is real. We started working in the company to obtain more contacts and see how it works on the inside.”

After working within WCM777’s structure, the Millers joined iButler, another project using MLM methods to attract more customers.


As of late 2014, Alexei and Andrei Miller started promoting an MLM-company focused on selling specialized software for facilitating user experience online. The project’s participants were offered to earn money from selling the software by purchasing a “developer package” worth of $100 to $750. Thus, it was a multi-level marketing scheme disguised as a company selling software in an unusual way.

There are evidences of the Millers participating in other MLM-based projects that we do not specify in this feature.

The Refund Request from an Investor

One of Kibo’s investors, who introduced himself as Maxim from Saint Petersburg, contacted ForkLog and told about the project’s refusal to refund him.

Remarkably, Andrei Zimin claimed in a new About Bitcoin podcast that Kibo received no refunding demands.

“Contrary to what there is on the internet, like claims or discontent, there’s no such thing, it’s a situation artificially initiated by a few people. If someone had any claims, they would contact the support service or the Slack channel. […] I exclude the possibility that the support service and ourselves wouldn’t even know about the problem. You may submit a claim when you have a claim. Again, nobody could tell us who was going to submit a claim, and on which grounds. So, it’s all rumors.”

At the same time, during their Skype call, the Miller brothers acknowledged that the claim was non-existent:

“Our support received one such message, even though it’s likely to originate from those people.”

In an earlier feature, we have already told about the claim and the support service’s response thereto.

The user that contacted ForkLog provided screenshots of Kibo support service’s response and his own personal account to confirm that he had invested in the project.

“If they refund me or move the assets to a contract that guarantees safety of the investment and distribution of funds as stated on their website and the support service’s response, I’ll have no further questions. And not just me, but, I believe, many other investors as well. But for now, as we can see, all they do is accuse your editorial board justifying it with links to witty texts on innovative marketing and PR videos,” Maxim commented.

The History of Kibo

Kibo was first mentioned in 2015. Back then, the entry cost was a bit higher, the referral system a bit deeper, the concept a bit less developed, and Ethereum was not involved at all, at least in public.

Maxim the investor has also found information that, in his belief, could compromise the project. In particular, it involves Kibo Partners (currently the site is unavailable) that used the same basic idea and design. One still may find videos like this one online:

There was also a website focused on the MLM community offering participants a passive income of $6,000 and higher.

Maxim also told that his friends and himself were on the search for people affected by Kibo and willing to have their investment back. After that, they intend to file a class action claim to the law enforcement.

ForkLog has contacted a lawyer to study some legal documents available on the project’s website in order to find out whether the support service’s refusal to refund the investor was legitimate. The Kibo funders told ForkLog the following about solving the problem with just refunding the investor:

“This would be illogical as it would set a precedent, and there will be [other people]. We can’t possibly know how the situation would unfold, we just explain the situation to you. You perfectly know it’s us, it’s us speaking to you, we have a legal firm, we’ve spent so much time on covering legal issues that it’s clear that we’re making a project, you’re in Russia, you know who handles the legal issues here, and there is Artiom Tolkachev, he also solved the problem for us, but he couldn’t resolve it the way we needed that. We went further, we searched a half of the world to solve this problem.”

Indeed, according to the user agreement on the website, that the user has to agree with upon signing up, refunding is not an option.

Notably, by sending money to the investment address, a user also agrees that all concluded contracts are subject to the Swiss laws, and that they have read the smart contract code at 0x80aa81029df9afdc70a621c86d7a81d7e9ed7e3a. The contract in question distributes referral rewards on the basic investment amount and sends the difference to a regular Ethereum address specified on the project’s website.

One has to give credit to the project’s legal side. It is extremely airtight, and one should thoroughly read it prior to investing. Apparently, investors should not hope too much on refund if they refuse to participate.

“If tomorrow such guys having some resources start spreading something somewhere, what would we have to do? Send money night and day?” one of the Miller brothers commented.

Legal Assessment

ForkLog asked Vladislav Likhuta, our publication’s legal expert and a lawyer of Axon Partners, to analyze the Kibo’s legal background and its ICO conditions published on the website. His conclusion reads as follows:

“The document Andrei Miller refers to is indeed available on the website. In fact, there are two: (1) Principles of Worksmart Contract System and Risks Notification, and (2) regular Sale Conditions (one may read them after signing up). There is a Switzerland-based legal firm that, according to him, was preparing the documents for KIBO. It’s the same company that was involved in the well-known ICO of SingularDTV.

The first document contains a provision stipulating that users are not entitled to any refund in regard of ETH tokens transferred to the smart contract. A user has to agree with this and other provisions upon signing up, and then once again when buying tokens. By “buying” I mean sending a certain amount of ETH to the smart contract.

In accordance with the Principles of Worksmart Contract System and Risks Notification, the tokens are not considered grounds for corporate rights and are not deemed securities. Token holders have no proprietary or nonproprietary rights. In fact, they just confirm a user’s participation in the system and their right to use the smart contract’s functionality. The Swiss lawyers used similar formulation for SingularDTV. In both cases, they chose the Swiss laws as applicable.

The relevant section of the website states that KIBO Lotto tokens are “similar” to preference shares of a company, while dividend distribution conditions (evidently, the term is not used literally) are protected by the smart contract. In the official bitcointalk thread, a KIBO’s representative called those tokens a “counterpart” of such shares. Thus, the company’s representatives do not position the tokens in controversy with the official documents as published on their website. Therefore, users buy tokens that just confirm their participation in the system while assuming the full responsibility. First by signing up, and then by buying them, they agree with all provisions set forth in the Principles of Worksmart Contract System and Risks Notification. For those reasons, any accusations of scamming are hasty.

The problem may lie only in the MLM background of the founders, and KIBO’s initial MLM methods. However, the edge of MLM businesses is very hazy, as activity of such companies may be considered illegal only if it is downright Ponzi-schemed. For instance, if a company is established and operates only for the sake of attracting new participants. Therefore, in the isolated situation with KIBO, it’s all okay in legal terms, especially in the absence of any laws regulating ICO.”

Experts and the Media

In late September, a few days prior to Kibo’ ICO,, a company focused on investment in blockchain systems and market analytics, removed Kibo from the list of monitored crowdsales with a reference to a preliminary analysis of the platform’s smart contract by Reddit users.

Tone Vays, a well known expert, blogger and former contributor at Brave New Coin and Cointelegraph, was very straightforward in his Tweet:

On the other hand, Boris Komarov, a bitcoin enthusiast and a crypto-evangelist, sees a great investment potential in the project.

“What if you can be an owner of a turnkey business with marketing value of $3 000 000  for just $130 ? A franchise that can be opened on a market with an annual turnover about $300 billion? No documents, no approvals, no licenses or other thing like this. Are you interested? I am. And I’m already here. PM me for details,” writes Komarov.

Andrei Zimin, the project’s technical advisor and developer, believes the claims are ungrounded as the lottery’s code would protect investors from the human factor.

“There is, of course. I take some part in developing the technical part (the contract itself) in the project. A guy from OneCoin came to me at the conference, he gave me his visiting card saying there’s a new project, KIBO (he didn’t know I was aware of that, yet knew nothing of OneCoin), and he’s actively engaged in its promotion. I know the information on KIBO on the system logic level, so I can bet my reputation there’s no scam involved. In fact, I may give the entire information and dispel any doubts concerning dishonesty of KIBO and the team. With the exclusion of marketing, which I have nothing to do with,” Zimin wrote.

The Miller brothers, in their turn, see no community behind the criticism of the project:

“It’s just three clowns actually got together and simply play their foul tricks on us,” one of them commented.

Earlier, the Merkle pointed out that using MLM as a business practice by Kibo was weird.

“What is rather intriguing is how the Kibo ICO will offer a referral commission. So far that has never been possible, and it is a red flag for anyone looking to invest in this program. Every referral investment made will award the recruiter with a one-time 3 ETH payment – not all that much, considering the minimum investment is 100 Ether. It’s still a very odd business practice.”

October 6, EconoTimes, with a reference to Steemit users, has published a feature specifying the reasons why users believe Kibo to be a dubious project.

As for the smart contract posted on GitHub, Ambisafe experts stated that there was no sense in analyzing it as currently only an abridged version thereof is in use.

“In technical terms, it’s the project’s closedness that makes us wary. The source code of both operational contracts on the platform is not published, with all raised funds controlled by decisions of a single person. It leaves the investors with no choice but to put trust in the good faith of the owners and the engineering expertise of the developers. If you opted to trust, at least make sure your password and financial password in the platform’s wallet are different,” Alexei Matiyasevich of Ambisafe commented.

However, the comment at the repository also notifies that the contract is abridged.

“Here you can find central proxy contract and token storage contract sources. Due to the current restrictions on gas limit, there are capsule version, working right now. Immediately after the lifting of the restrictions contracts will be replaced by their full versions,” it says.

The Kibo team stated that the platform’s main smart contract is currently undergoing an audit, and will be published in a short while.

Thus, all user claims against the project may be summarized as follows:

  1. Past connections of the Miller brothers and Kibo partners with MLM-related projects and proven Ponzi schemes.
  2. Lack of information on developers and team members on the project’s official website.
  3. Lack of published source code of an operational and secure smart contract.
  4. Fundraising with a regular Ethereum wallet. Money is indeed stored not in a smart contract, but get redistributed via the contract on an Ethereum address.
  5. Using multi-level marketing methods and approach to promote the project.

On the founders’ side, that basic argument for using MLM techniques in Kibo is fast involvement of wide audiences. It is evident that the Miller brothers have been members of the MLM community for years, and have been involved in several projects of that kind. Therefore, one may suggest they are well aware of specificity of the audience interested in MLM programs and related risks.

One of most basic problems with MLM systems is fast profit-making by attracting new participants and further loss of any interest to the project. Eventually, in six to twelve months after the commencement, only around 10 per cent of the initial audience remains active, so any marketing advantages of the involvement model become obsolete. Additionally, the MLM approach is a very common method of Ponzi schemes as confirmed by the Miller brothers themselves.

“We started working in the company [WCM777 – ForkLog] to have more contracts and see how it works from the inside. It closed, just like 90 per cent of all MLM companies that started working two to three years ago, because all of them were Ponzi schemes.”

The U.S. Federal Trade Commission also highlighted MLM companies’ inefficiency in its research, stating that over ninety per cent of participant are at loss from participating in such ventures.

“MLM as a business model is the epitome of an “unfair or deceptive acts or practice” that the FTC is pledged to protect against. It is even worse than classic, no-product pyramid schemes (for which the loss rate is only about 90%) and “pay to play” chain letters. For promoters to present MLM as a “business opportunity” or “income opportunity” is a misrepresentation,” the report reads.

Still, the Kibo founders are confident that their model is stable and commercially viable.

“We offered a product and came up with a scheme that would allow us to go viral without millions in the audience. We’re gathering a base, like 10,000 platforms, give them a tool for free promotion, gift tickets, and people just start coming and bring others along. First they play for free, and then we offer them a chance to win much more by buying a ticket. If they start buying, there will be an audience of users forming on the platform in one way or another. The profits are formed by sold tickets only, while customers pay no fees. We take money just now to assemble this initial audience of platform owners, and this money is spent only on tickets,” one of the Millers elaborated.

Currently, Kibo’s ICO is ongoing, and will finish on November 9, 2016. It is quite obvious that all this controversy is about the misunderstanding between two groups of users: the MLM community and the part of the cryptocommunity that rejects MLM methods.

The ForkLog editorial board may only hope that the Kibo team would do its best to answer all questions and make the project’s development transparent enough.

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