Searches at Vyriy Industries: key points from CEO’s press conference and law enforcement statements

On 7 July, the State Bureau of Investigation conducted searches at more than 40 locations linked to Vyriy Industries and its founder and CEO, Oleksii Babenko. Law enforcement officers visited the company’s office, the founder’s home, his relatives’ homes, and sole proprietors (FOPs) working with Vyriy.

Same evening, Babenko convened a press conference, at which he said that the State Bureau of Investigation had seized documents, as well as his personal phones and funds. He also shared his own ideas of the reasons behind the searches.

Defender Media has compiled everything known about the situation and how the company, law enforcement, and the defence tech community are responding to it.

The State Bureau of Investigation is examining a theory of inflated drone prices

The first information about the searches appeared yesterday on the official blog of Vyriy Industries. In a comment to Defender Media, Babenko stated that the reason for the investigative actions was possible overpricing of drones.

The State Bureau of Investigation later confirmed the searches, without naming the company. According to the bureau’s data, during 2025, a private enterprise supplied UAVs under state contracts worth a total of UAH 6.95bn.

Investigators are examining a theory that company representatives may have artificially inflated the cost of their products. To this end, they allegedly overstated production, administrative, and other costs without justification, thereby affecting the final price of the drones.

At the press conference, Babenko said that the price of Vyriy’s FPV drones is approximately 20% lower than the drone market average. “For comparison: the average price of a 10-inch Vyriy drone is UAH 16,314, compared to UAH 21,967 for competitors,” Babel quotes the entrepreneur as saying. According to Babenko, as of the end of June, 33% of product orders placed through DOT-Chain Defence were for Vyriy Industries drones. They are procured through the Brave1 Market platform by 212 military units.

There was no court order for the searches; they were described as “urgent investigative actions”. Oleksii Babenko, according to him, is involved in the case as a witness.

Following the searches, the company stated that it is continuing to operate as normal. Babenko clarified that the number of drones shipped will not be affected by the investigative actions, but that Vyriy will change its security policy to protect production and staff. The founder himself will also change his place of residence, which he had only recently found.

What is known about the scheme involving sham sole proprietors

The State Bureau of Investigation is also examining possible manipulations involving the splitting of operations among sole proprietors. The State Bureau states that this scheme may have been used to process financial and business transactions, artificially inflate costs, and potentially divert funds. According to the State Bureau of Investigation, the total amount of questionable transactions exceeds UAH 197m.

Law enforcement officers have identified more than 150 sole proprietors who may have been used in the scheme. According to investigators, these include manicurists, students, shop employees and others.

Some of the participants have already been questioned, the State Bureau of Investigation says. Ten people admitted that they had not engaged in entrepreneurial activity, but had only provided documents for state registration in exchange for money. At the same time, the Prosecutor General’s Office states that the homes of some sole proprietors who carried out multi-million-hryvnia contracts were searched. It adds that their lifestyle does not indicate the presence of any significant wealth or income.

At the same time, Babenko stated at the press conference that these sole proprietors are producers of drone components.

Law enforcement officers found UAH 40m in cash at Vyriy’s office. According to Babenko, this money is for staff salaries. They are paid in cash for security reasons, so that banks do not hold lists of employees. The company provided the State Bureau of Investigation with documents confirming the origin of the cash.

How the arms manufacturers’ community and investors reacted

Following the searches, several industry organisations and companies immediately issued statements. NAUDI states that it respects the work of law enforcement agencies, while calling for the enterprise’s operations, production, and contract fulfilment not to be disrupted.

Ihor Fedirko, CEO of the Ukrainian Council of Defence Industry, and Technological Forces of Ukraine also stated that the investigation should not paralyse the operations of a company that supplies products to the front.

At the same time, all of them note Vyriy Industries’ important role in the Ukrainian UAV market. Fedirko writes that the company provides up to 25% of FPV drone supplies to the Defence Forces. NAUDI calls Vyriy Industries one of the pioneers of the Ukrainian FPV drone market, which “has consistently increased production capacity, expanded its product range, and made a significant contribution to supplying the Defence Forces”.

Roman Sulzhyk, founder of the Resist.UA investment fund, says that the state should respond to any violations if there are sufficient grounds for doing so. But such work must be systemic, consistent and clear to the market, rather than creating an impression of selective action.

In his view, how measured law enforcement decisions are and how they are communicated affect not only trust in individual processes, but also how the entire Ukrainian defence tech sector is perceived by international partners and investors.

At the same time, media headlines about corruption in Ukrainian defence procurement pose reputational risks for the entire market and allow Russia to launch an information campaign against investment in Ukraine. “Several foreign investors have already written to me with questions about the situation,” says Sulzhyk.

Among the military, the situation prompted a response in particular from the Signum unit, which was the first to successfully deploy FPV kamikaze drones in 2022. “Around 80% of the drones used by our unit are made by this manufacturer. The reason is simple: on the Ukrainian market, these are among the most affordable and effective airframes,” the unit wrote.

At the press conference, Babenko suggested that the pressure on the company may be linked to the actions of market competitors. “Someone wanted to advance their own petty interests and went a bit too far,” he says.

In Babenko’s view, the searches are not connected to Babel’s high-profile investigation into a series of non-combat losses in the Skelya assault regiment (Babenko is the majority shareholder of the outlet). After the investigation was published, posts accusing the founder of Vyriy Industries appeared on anonymous Telegram channels.