"Everything was fine, until that company that was meant to develop their device came out on the internet and said that Giza has cut ties, and it seems to be a scam and they might not be developing anything. Then things started looking fishy," an investor named Chris, who wished to keep his surname anonymous, told CNBC by phone. Giza's website was deleted last Friday, but an archived version can be seen here . Late last year, Giza contracted a Russian firm known as Third Pin LLC to make the devices it would eventually sell. The Third Pin website explains that it makes hardware for a number of industries.
But on January 30, Third Pin's CEO, Ivan Larionov, posted on a bitcoin forum that his company had cut ties with Giza. Larionov confirmed to CNBC that Giza had contracted Third Pin and that the post was his. The Third Pin CEO explained that he was contacted by a representative of Giza before the new year. He was given a design for a device that Giza wanted to make, but not technical requirements. Once Third Pin's engineers had worked out the specifications of the device, they quoted a $1 million price for Giza and signed a contract. Larionov contacted STMicro, a components supplier, to help get the parts required for Giza's device.
He said that the sales manager at the company was asking basic questions, such as the quantity required and when it would be produced, which Larionov couldn't answer. The Third Pin CEO got in touch with Fike, who gave answers that Larionov described as unclear. That was a red flag, Larionov said. Fike asked Larionov if he would be willing to set up new operations outside Russia and manage the relationship with Giza from there, Larionov told CNBC. The Third Pin CEO suspected that Fike wanted to get away from Russia's strict cryptocurrency rules but declined that request.
As Third Pin continued assessments on the cost of production, the company found that it would be higher than initially thought. The cost to Giza went up to $1.5 million. Larionov suggested to Fike that Giza could pay in installments, something Fike didn't want to do. "At that moment he said no, no way," Larionov told CNBC. "So next thing I said to my employees is that we will cut the contract." One of the investors, who wished to remain anonymous but who used the screen name ShayJo, showed CNBC an exchange with Larionov over messaging app Telegram, in which he told the same story.