The Russian invasion and the role of cryptocurrencies at the service of states
The Russian invasion and cryptocurrencies
In the 2021 Geography of Cryptocurrency Report , published by analytics firm Chainalysis in October last year, Ukraine ranks fourth in the world in cryptocurrency adoption. A ranking built from private activity with cryptocurrencies in the country, weighted by their purchasing power (PPP: purchasing power parity). A position that occupies after Vietnam, India and Pakistan. The first Spanish-speaking country in this ranking is Venezuela, occupying seventh place.
In the Chainalysis report, the Russian Federation ranks 18th. Now, what is striking is that if you look at the volume of P2P transactions in this country, it goes up to 122nd. That is, it seems that cryptocurrencies have a function other than that of exchange between individuals.
In the most recent 2022 Crypto Crime Report , also from Chainalysis, Russia ranks high in the High Risk Jurisdictions category. It does so together with North Korea and Iran. Three spaces that seem to be configured in the way that some Caribbean islands did with pirates, during the 17th and 18th centuries, as refuges. Like the Bahamas, known in the golden age of pirates as the Pirate Republic. However, there is a suspicion that more than pirates, some of these criminal activities carried out from these countries are more similar to those of corsairs, carried out under state sponsorship, since they served the warlike interests of the states that gave them protection.
Crime and crypto currencies
Regarding Russia, the report notes that: “Russian-based individuals and groups – some of whom have recently been sanctioned by the United States – stand out for disproportionate activity in various forms of cryptocurrency-based criminality.” Due to the mixture of good computer training and low economic expectations, Russia has tended to be the home of good and skilled hackers.
However, what is striking in this report is the link that is established between some of the criminal organizations with cryptocurrencies and the Russian government itself. This is the case of the criminal organization Evil Corp, specialized in the production of ransonware, malicious software dedicated especially to the kidnapping of data, released after paying the ransom imposed by the criminals. Moreover, the report suggests the government protection that some cryptocriminal activities have in the so-called CIS (Commonwealth of Independent States), formed by countries of the former USSR.
Moscow, financial capital of money laundering
A specialization in criminal activities, with supposed state protection, which had already been appearing like a black cloud over Russia. But that has become a solid threat since last Wednesday Putin ordered the invasion of Ukraine. An invasion of our computers from Moscow is feared, as indicated by the messages, advice and calls to exercise extreme caution that the various Western institutions responsible for ensuring cybersecurity have made to their citizens, public bodies and companies.
On the other hand, the Russian protective role towards money laundering with cryptocurrencies is also highlighted. At the very least, Russia appears as the destination of highly suspicious operations. Moreover, Moscow is given the title of financial capital of money laundering, to the extent that this city is home to different companies that are the destination of operations that are highly suspicious of being related to money laundering. It even points to its concentration in the same urban complex, such as the Moscow skyscrapers with the name of Federation Tower. Companies based in Moscow that provide money laundering services are: Garantex, Buy-bitcoin, Bitzlato, Eggchange, Tetchange or Suex.
Several facts are significant. The most striking, the impunity of these criminal activities, which have been denounced from other countries for a long time. Another: while the Russian central bank authorities advocate a ban on mining in Russia, President Vladimir Putin has been a supporter of it. Few doubts remain about who rules the country.
Cryptocurrency crowdfunding for Ukraine
In this context, the war. Ukraine is receiving funds in cryptocurrencies, in a kind of crowdfunding, from activists sympathetic to the Ukrainian position. A more direct, agile and faster support than that provided by banks. Therefore, cryptocurrencies become a source to finance the war. In addition, some mining companies, such as Flexpool, have stopped providing services to Russian users, in solidarity with Ukraine.
In addition to the direct warlike use that Russia could make of the promotion of ransomware activity, the use of cryptocurrencies could be a way for the Eurasian country to overcome the financial blockade contemplated by some sanctions from the West. In fact, this possibility is of particular concern to the US authorities, putting experts and even companies to work on how to tackle this possibility.
The cryptocurrency invasion
The Russian invasion of Ukraine seems to have brought the warlike invasion of cryptocurrencies. Who would have thought when bitcoin was peacefully born just over a dozen years ago? It is the passage of cryptocurrencies at the service of society, that of nations and states.