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Shall we play a game? Meet the eSports fanatic who cornered Russia’s surveillance industry

Source: Baza

Anton Cherepennikov has had quite the career and he’s not yet 40. A decade ago, he partnered with Alexey Kolesnikov, one of the best eSports players in Russia, to form a premiere team that grew into a briefly profitable business, training players and drawing major sponsorships before it attracted a massive investment from the oligarch Alisher Usmanov. Cherepennikov’s greatest impact as a businessman, however, hasn’t been in competitive computer gaming but in the cybersecurity industry, where he founded a holding company called “Citadel” that now controls most of the manufacturing for Russia’s key surveillance technology: “SORM.” In a report for the news outlet Baza, sources told journalist Andrey Kaganskikh that Cherepennikov is not, in fact, an independent figure in the SORM market, calling him “an avatar for Alisher Usmanov’s business interests.” Cherepennikov insists that he is a “self-made” entrepreneur, and he’s spent the past several years trying hard to distance himself from the oligarch. Meduza summarizes Baza’s profile of Cherepennikov.

Alexey “LeX” Kolesnikov is one of the best Counter-Strike players in the world. In 2003, he first met Anton Cherepennikov at a hole-in-the-wall gaming club where mostly young men gathered to riddle each other with bullets in cyberspace. Kolesnikov told Baza that he recalls disliking Cherepennikov, who taunted him mercilessly despite losing their match. This bad impression didn’t last, however, and the two players soon formed a team they named “Iron Will” and began recruiting other talent. Kolesnikov agreed to join Cherepennikov in exchange for lessons in entrepreneurialism.

In 2010, they decided to turn their partnership into a business, reviving the brand Virtus.pro and renting a three-bedroom apartment in Moscow’s Vykhino District to use for a player training program (“like a dorm for students or athletes”). After two years, the team finally won enough attention to attract some sponsors. In 2012, the monitor-manufacturer BenQ paid Virtus.pro $10,000 a month to promote its products. But Cherepennikov later recalled that he was spending as much as $15,000 per month on player salaries and travel fees to send them to competitions. He owned several electronics stores at the time, but financial records suggest that these businesses (despite some government contracts) wouldn’t have been enough to sustain his investments in the eSports industry.

In 2014, Cherepennikov acquired Isfors Rus, the company registered three years ago by Kolesnikov that owned the VIRTUSPRO trademark. Soon thereafter, Cherepennikov met with Alexander Kokhanovsky, the founder of the Ukrainian eSports company Natus Vincere. In 2015, the two businessmen founded the streaming company Storm Studio and a tournament-organizing business called Dreamz Media. The two organizations became the basis of ESforce, which attracted oligarch Alisher Usmanov. In October that year, Usmanov’s USM Holdings invested a massive $100 million in eSport companies owned by Cherepennikov and Kokhanovsky. He later told Forbes that the decision belonged entirely to his “young businessmen” and confessed no interest in competitive gaming.

It would prove to be an unwise decision, albeit not for Anton Cherepennikov, who managed to sell his ESforce shares to Usmanov for tens of millions of dollars in 2018. By 2020, ESforce’s value had plummeted from roughly $100 million to just $30 million. Even Isfors Rus was no longer profitable.

For all his success in the industry, the gaming world has been only a hobby for Cherepennikov. As Baza explains, his main work has always been in Russia’s cybersecurity market. In 2015, the same year that he revived Virtus.pro, Cherepennikov founded the holding company Citadel, which included businesses integral to Russia’s key surveillance technology, SORM (System for Operative Investigative Activities). According to Baza, the company responsible for installing and integrating deep-packet-inspection (DPI) hardware into Russia’s Internet service network is also tied to businesses owned by Cherepennikov. (DPI technology is what allowed the Russian authorities to throttle Twitter and block Alexey Navalny’s Smart Vote initiative, earlier this year.)

Baza says a man described as “Usmanov’s fixer” controls a tenth of Citadel. According to investigative journalists at the Dossier Center, Valery Bitayev enjoys remarkable access to senior officials in Russia’s Interior Ministry, Federal Security Service, and Attorney General’s Office, “where he’s greeted like a most honored guest.” He reportedly acts as an intermediary for other billionaires in Russia, like Andrey Skoch and Vladimir Yevtushenkov.

Today, Citadel and another 30 or so I.T. companies fall under the umbrella of ICS Holding LLC, which Cherepennikov also founded. Last year, Usmanov bought the LLC, but he sold it back to Cherepennikov in October 2021 amid rumors that ICS Holding plans to expand to international markets (and apparently hopes to shed its affiliation with Usmanov). Cherepennikov has also become eager to distance himself from the billionaire who’s helped to make him so wealthy today. But the experts who spoke to Baza agreed unanimously that Cherepennikov “is not an independent figure in the SORM market.” Many sources described him as a mere figurehead for Usmanov’s assets in the industry.

Though his work has intersected with Usmanov repeatedly over the years, Cherepennikov has ties to other prominent figures in Russian cybersecurity, as well. Six years ago, his businesses were linked to then Deputy Prime Minister Igor Shuvalov (who now serves as the chairman of the development bank VEB.RF). In 2019, moreover, Citadel reportedly invested in a white-hat-hacker startup launched by the 23-year-old programmer Boris Korolyov, whose father happens to lead the Federal Security Service’s economic crimes division.

Cherepennikov still games, but he no longer competes in multiplayer tournaments. His old friend Alexey Kolesnikov told Baza that he sees Cherepennikov’s activity in his Steam feed. He sticks to one-player games now.

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Original report by Andrey Kaganskikh for Baza

Summary by Kevin Rothrock

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