Ivan Scherbakov, CryptoRobotics: “Incomes are high here. But the cryptoindustry’s infrastructure is very weak”
How to attract 7,000 users to the product within two years by selling solutions for $50,000 and to expand the business under a white label model
29-year-old Ivan Scherbakov from the northern mining town of Inta in the Republic of Komi fell in love with Kazan when he was still a student. Here he founded a company that developed and supports a cross-platform cryptocurrency trading terminal. During the period of a great fall in the cryptomarket in the autumn of 2018, he bought his partner’s share out, invested his own money in the company and stood afloat. And a couple of weeks ago, CryptoRobotics entered Livecoin cryptocurrency exchange by placing its own token — ROBO. In an interview with Realnoe Vremya online newspaper, Ivan Scherbakov explained how cryptocurrency was stolen, why use a separate computer for trade, why 41 people wear a tattoo of CryptoRobotics's logotype, why life on Bali is great besides having the ocean and many other things.
$400,000 for launch and another 15 million rubles to stay afloat
Ivan, to start with, let’s make it clear who you are at CryptoRobotics because on the website you are indicated as the founder, but you identified yourself as an adviser.
I am the CEO of the company and now the main founder because I bought my partner’s share out.
Where did you first meet your already former partner Ilnur Mukhtov?
Cryptoblogger Anya Pleshkova, who is famous as CryptoOptimist, introduced me to him in early 2017. Ilnur had a hookah lounge on Bauman Street taking bitcoin at that moment. Half a year after the first meeting, he came to me to learn. I was actively sharing my knowledge then, how to select cryptoassets for investing, how to form a portfolio with them and how to manage it. And several months after completing the course — in the autumn of 2017 — he came to me starry-eyed. Ilnur is a trader and ideologist of CryptoRobotics project with 11 years' experience. He got into the cryptocurrency industry and saw high incomes here. But the cryptoindustry's infrastructure is very weak. While he wanted all the tools he got used to using in the stock market, transfer them into the cryptoworld or, more precisely, a convenient trading platform, robots, the feature of automatic tracker for traders. There had been no such thing. Now there is, we created it.
Why did Ilnur leave the business he created himself?
In 2018, we turned out in crisis in this market and had to invest our own money in the project to stay afloat. Only I was ready for it, this is why I offered him to buy his share out.
What was the share each of you held?
We had 40% each plus investors had 20%.
How much did you pay to buy Ilnur’s share out?
I will say it the following way: now 20% of the company are sold for $500,000.
Ilnur is a trader and ideologist of CryptoRobotics project with 11 years' experience. He got into the cryptocurrency industry and saw big incomes here. But the cryptoindustry's infrastructure is very weak. While he wanted all the tools he got used to using in the stock market, transfer them into the cryptoworld
Did you consolidate 80%?
No, I distributed them among the top management, while I hold 50%. In addition, I reserved 20% of the company in case an investor pays attention to us.
Generally speaking, the company kicked off during the period of intensive growth in the market in 2017, the fall a year later was also rapid. Did you manage to survive only by means of cash injections you talked about?
Of course, and thanks to the team. It is amazing. They are just in love with the project and the product, and no difficulty made them start looking for something elsewhere. Money can always be found, this is why the team is in the first place.
How much money did you need to enable the company to remain competitive?
About 15 million rubles.
How much did it cost you to start this business?
$400,000 that I borrowed from investors.
“We are operating in the grey area”
Your headquarters is in Kazan, but you were registered in Gibraltar. Why?
We started the project here because Kazan has the best programmers. The stock market has such a product as MetaTrader (an electronic trading platform used for trading in markets), it also was invented in Kazan. The value of Kazan programmers is many times lower than those of Moscow, while the responsibility and quality of work are much higher. And Gibraltar was chosen because Russian legislation isn’t so far ready to register companies taking cryptocurrency and having their own token. Now we are operating in the grey area. What we do isn’t forbidden but neither is it regulated officially at the moment. However, everything can change soon because a corresponding law can be adopted.
Huobi cryptocurrency exchange got a licence for trading in Gibraltar as well. Is there any cryptohub in Gibraltar?
Exactly, and there are already several cryptohubs on our planter. Gibraltar is one of them. One can open a cryptocurrency account right in the bank and convert it into dollars, euros and back. And it is all official.
There is a number of companies that register in Zug (a town in Switzerland). But they have their own language, their own prices, expensive offices there. It is quite costly to maintain your company, not everyone goes there. There is also Singapore, Malta. Cyprus is one of the most recent destinations. And many exchanges and other companies have transferred the registration from the cryptocurrency market to these countries in the last years.
CryptoRobotics has recently entered Livecoin cryptocurrency exchange. Isn’t it Russian?
They have a website on Russian, yes, but it comes from Great Britain, while the exchange’s servers are in the USA. However, its board has founders from Russia.
Now we can state that you have entered the external market.
Yes, a new stage of development has begun, now foreign players are assessing us. We have our own token in the company — ROBO, it is a certified utility token. All services of our platform are purchased only for ROBO. Unlike many companies in the cryptocurrency market, we don’t focus on extensive publicity of our token but try to attract new users to our platform. The logic is simple: the more users, the more purchasers of our fee-based packages, the higher the demand for our token. The ROBO rate on the exchange grows naturally.
“We reached ICO at the worst time”
What’s the daily trading volume on your platform?
About $11 million.
How much money did you raise for ICO? And how much is the cap you placed for yourself?
We hoped to raise $5 million. It was the biggest number, our hard cap. But we hardly managed to reach the soft cap bar of about $1 million.
Do you consider it as a failure?
This could have been called a failure if it were 2017 and the names of founders and developers were known all over the world. But as we are a Russian company and reached the lowest bar of money raised for further development, it is certainly a victory. Thousands of people around the world learnt about us thanks to ICO, we managed to create a community: the first users of the product, its followers and testers.
So what did you miscalculate?
In Asia, we spent on marketing more than we raised. And the most unpleasant thing is that we reached ICO at the worst time, during a market correction. Cryptocurrency rates were catastrophically falling down, and all investors, all our target audience didn’t think about investments but we were trying to save what we had. There is a beautiful metaphor that the market breathes in and out. So we got into the out, moreover, the fall was so big that the majority of investors lost their hope for the next «breathing in» thinking that this market was dying.
The tattoo was Ilnur’s idea. He is an experienced marketer and was constantly looking for methods of guerrilla marketing. Now 41 people have a tattoo of the logotype of CryptoRobotics
As for marketing, you launched a brave campaign at that time: 25,000 ROBO tokens (125,000 rubles) for a tattoo of the company’s logotype.
Yes, yes, it was Ilnur’s idea. He is an experienced marketer and was constantly looking for methods of guerrilla marketing. Now 41 people have a tattoo of the logotype of CryptoRobotics.
How many users does your platform have today?
We have attracted over 3,000 clients. In general, about 7,000 people are using our products now. And we have sold our robots to several companies that sell them with their own brand.
What is the income CryptoRobotics makes?
Our first income was in November 2018. I can say that our revenue has been a bit more than 20 million rubles in the last eight months — from November to June.
“Our client got to make a 39% gain a month”
You planned to introduce algorithmic trading besides basic tools.
The terminal has a variety of algorithmic solutions inside: stop loss, take profit, trailing, while our trading robots allow trading around the clock, 24/7. They trade on the basis of several trading strategies, look for positive entry signals, enter a deal and look for positive exit signals to make a profit for a trader. And if the robot has made a mistake, and the market developed in the wrong direction, it just leaves the deal with a small loss, it can be both one and five per cent, the user chooses it himself.
The smarter and more experienced the trader, the more the income with this tool. We have absolute records. Our client from Sochi got to make a 39% gain a month. It is an amazing result. But the robot provides 7% a month on average, as most of our users today are beginners.
Over 90% of robots in the market are sequential. And our concurrent robots can operate with thousands of users at the same time — it is very complex solutions. We can expand them and sell our infrastructure to a business that has its own audience as a white label.
How much will such a solution cost?
Have you already launched the autotracker as you planned?
We have introduced automated signals for a big German company. And we will have it in our terminal in September. It looks like PAMM accounts a bit when a client can sign a smart contract with a trader keeping money on an exchange and not giving it to anybody, which allows him to copy all the deals of the trader and earn as much interest as the trader does a month.
Thousands of people around the world learnt about us thanks to ICO, we managed to create a community: the first users of the product, its followers and testers
What are you working on now?
On a robot designer thanks to which any trader can develop his own strategy, even a complicated one, in the trading robot. There is a number of patterns where any indicator can be specified. One doesn’t have to know how to programme or have some other special skills for this purpose. Everything is very simple, it is assembled for 2-4 minutes. And traders can not only use but also sell their intellectual labour — their strategies — in our marketplace. We will get a 30% fee for it. It is a kind of analogues of Play Market and App Store, just with robots instead of mobile applications.
“We exclusively grant a person the right to run an activity in his own country”
And today you are already represented in several countries under master franchise.
Yes, we have representatives in Israel, Hungary, South Korea, China, Germany and the USA. And we constantly go to international conferences in search of new partnerships. Much more people trade cryptocurrency in other countries than in Russia, and the audience is more solvent, this is why we try to shift the focus abroad after testing a product in our market.
How much is the lump sum payment under your franchise?
From $20 to 100,000 depending on the country. If we are talking about Georgia, Armenia, it is 20, if it is the USA, Japan, then it’s 100. The payment is for us a guarantee that the partner stays with us. When a person invests money, he has a completely different approach, other responsibility and motivation. But if it is a person with a serious reputation, the payment may not be needed. We exclusively grant a person the right to run an activity in his own country. And we share 50% of profit with the franchisee.
Whom do you consider your opponents?
Most companies are foreign and aren’t well known in Russia, but I will name them — HaasOnline, Coinigy, CryptoHopper, TabTrader, Margin, CrypTrader. They mainly have one or two, three products as maximum, while we work as a whole providing a whole range of services for different audiences: for investors, professional traders and beginners in this market as well as for companies that manage their clients’ money.
“Cybercrime improves every year”
What are the market trends this year? And what expectations do you have?
The expectations of the market are very positive. Apart from me, there are more than a thousand people around the world who believe in a bitcoin rate of over $100,000 and understand that the blockchain technology is applicable in many spheres of humanity. Thousands of companies operate in this market now, and tens of new companies appear every day. Speaking about tendencies in trading markets, now many are now looking for someone to give their cryptocurrency for trust management but to save it on their accounts and see what a trader does and how. A big number of people got their fingers burnt dealing with swindlers. And the mission of our company exactly correlates with market tendencies. We allow making a profit by keeping money on their accounts. All our solutions suggest that the currency is on a client’s account.
What about bitcoin exchange facilities?
About 80% of cryptocurrency exchange take place in the OTC market, that’s to say, over the counter where two people transfer cryptocurrency and money to each other. These moves don’t influence the cryptocurrency rate because they aren’t shown in graphs. It is a grey area in Russia. It is not prohibited. Nobody catches them. There are hundreds of exchange facilities in Moscow, they operate calmly, people go there every day. It is when it comes to precisely the purchase of cryptocurrency. Yet there is one point: one can’t pay with cryptocurrency, for instance, in a shop. Ilnur, for instance, had problems with this hookah lounge. The prosecutor’s office called him. Many guys in Russia have had difficulties.
Do online wallets often implode?
Not as often as banks do. When money is lost, the problem is more often local and is located in the client’s computer, for instance, a virus or other malware can deprive him of money. This is why one should have good financial hygiene, be careful about one’s keys, passwords. Investors very often forget passwords, someone’s girlfriend threw the computer out of the window in a fit of jealousy, such things have also happened. It is better to use a separate computer for trading that you don’t use to surf the Net. About 3-4 million out of 18 million bitcoins are considered to be lost permanently.
The expectations of the market are very positive. Apart from me, there are more than a thousand people around the world who believe in the bitcoin rate of over $100,000 and understand that the blockchain technology is applicable in many spheres of humanity. Thousands of companies now operate in this market, and tens of new companies appear every day
What has been your biggest loss?
It was linked with a Russian bank, not cryptocurrency. Once I received a bit more than 3 million rubles from natural persons and through exchange facilities. And the whole sum was frozen by the bank. They asked to explain the source of this money. I didn’t manage. And I was deprived of this money. Your money seems to be in the bank, but it doesn't seem to be yours.
A similar story happened to cryptocurrencies. When you store them on a cryptocurrency exchange, they aren’t completely yours. You have to have a private key that signs any transactions so that the cryptocurrency belongs to you. And exchange owners keep the private key. A big number of people write the private key down on a piece of paper and keep it in the strongbox. Somebody manages to learn it by heart, and somebody keeps in a local notebook on the computer. And there is a number of different programmes that are disguised as software for cryptotraders. A person clicks on the link, installs the programme and begins to send the whole clipboard to the intruder — everything turns out under threat. And one can connect to one’s home Wi-Fi, use his router and catch the connections, grab a person’s private key. Cybercrime improves every year.
“People who don't know how it works created this law”
You already began to talk about the law on cryptocurrency use, which Russia is to adopt until the end of the year. But won’t it affect your activity given your registration?
It won’t. But people who don't know how it works created this law. They have never had cryptocurrency, never tried to trade. It is people who are trying to get to a new market with old norms. There are big questions for those who created it.
Why is it absurd?
I won’t be discussing this law. It hasn’t been adopted yet, and something can change there.
You have been actively teaching. Is it additional income at the peak of cryptocurrency’s popularity?
I have been teaching cryptoinvesting since late 2015. I stopped giving offline classes in 2018. I have taught several people personally this year. It was a 6-month course. At the moment I am going to different international conferences. It is very good for my reputation, the promotion of the company, it makes the market valuable, it is always a stimulus for me to develop and keep up with the market. The best way to learn something is to teach other people. You start to have a great stimulus to be smarter, stronger.
At the moment I am going to different international conferences. It is very good for my reputation, the promotion of the company, it makes the market valuable, it is always a stimulus for me to develop and keep up with the market
How did you learn to work in the cryptomarket?
I began to learn when there was too little information on the Internet, there weren’t good YouTube channels, literature. I collected information bit by bit from different forums. I went to cryptoevents, asked uncomfortable, silly questions unless I understood it myself. I began to gather small online groups of 50-100 people in late 2015 and taught them the basics. Then my audience began to grow, ask more complicated questions, and I started to grow with it. I gathered small groups of 30 people at the peak of activity in 2017 when there was a buzz in the market. However, the course cost $2,000. People who can spend such a sum on their development are, as a rule, interesting, have their own businesses, this is why the audience was very good. I took this group to a recreation camp in the suburbs for three days where I combined training, networking and entertainments. It was a good time, I fondly remember it.
“People’s total loss was over $10 million”
Why did cryptocurrency interest you at first?
I have always dealt with investing and preferred a highly remunerative and risky source of income. I invested in realty at the earliest stages, looked for companies with trust management. Everything that could provide from 60% a year, better from 10% a month, was interesting for me. And one day I couldn’t help but acquaint with cryptocurrency.
You have probably invested in Ponzi schemes.
I even made portfolios for them. I chose five such companies and invested $2,000 in them understanding from the very beginning that two-three of them wouldn’t survive till the end of the year but the rest will bring me a great advantage.
Have you got your fingers burnt in the schemes?
I have, and not only once. The biggest loss was in 2017, it is 24 bitcoins. According to today’s rate, it is $300,000, which was much more then. There was such a company as FCT Academy founded by two real traders with a good reputation. They had been dealing with cryptoinvesting, cryptotrading and teaching people for several years. They earned a good reputation in this market and took advantage of it. By my estimates, people’s total loss was over $10 million.
The best way to learn something is to teach other people. You start to have a great stimulus to be smarter, stronger
“Kazan is very lively from the entrepreneurial perspective”
How did you earn your first capital that allowed you to start investing in something?
I earned my first big money in multilevel marketing (MLM). I developed matrix companies. One of them is the German company Emgoldex (specializes in the buying and selling of investment gold bars). I also traded real estate in the primary market. I have good sales skills, I managed to sell eight apartments a month. First, he worked in the real estate company Rusnedvizhimost, the largest in Kirov. Then he signed a contract directly with the developers.
Now I am studying investment land plots, including in Bali, where they are going to build a new airport in a few years with a capacity three times higher than now.
How did you end up in Kirov?
It was the nearest city with a university, if you go by train from my hometown of Inta in the Komi Republic. The nearest provincial centre is Kirov. For me, Kirov then was a big city with 400,000 population. I entered the economy department. I've been playing truant a lot. In the fourth year, I went to practice my profession to a geological company, then I went to a real estate company. A few months later, my classmate offered me a job in a network company, where I accumulated the first capital of 10,000 dollars. From Kirov, I moved to Kaliningrad, then lived in Moscow, in Kazan, now I am living in Bali. I fly from 80 to 100 times a year.
How did you find yourself in Kazan?
I always liked Kazan. I used to come there in the first and second years, when Riviera Aqua Park had just opened. There are good people, beautiful buildings, parks, girls in this city. From an entrepreneurial point of view, Kazan is very lively. You go to any cafe, hookah — and everywhere someone sells something to someone. By energy, it can be compared to Moscow because people want to move, to do something. But in Moscow, there is more stress, roads take a lot of time, people are often late and break their schedule. In Kazan, you can do all your businesses in an hour. Kazan is beautiful, I love it.
By energy, it can be compared to Moscow because people want to move, to do something. But in Moscow, there is more stress, roads take a lot of time, people are often late and break their schedule. In Kazan, you can do all your businesses in an hour
But you are living in Bali.
The nature is great there, the food is great. You can eat fruits all year round. In the morning, instead of a shower you can go under the waterfall. Very interesting people. Strong business community. People who were able to build their businesses remotely, delegate tasks, have systemic thinking. They always have something to learn. And, of course, the ocean.
Shcherbakov Ivan Aleksandrovich was born on September 13, 1990, in Inta, Komi Republic. He is a member of the Eurasian Council on Small and Medium Business in the field of blockchain. The founder of Cryptorobotics Limited LTD — the cross-platform terminal for working on the crypto market. It offers the following functions and tools for trading: algorithmic trading, price chart customization, direct connection to the exchange without a broker-intermediary, work with technical indicators. The share of Ivan Shcherbakov in the share capital of Cryptorobotics is 50 per cent.