Business 1 year ago

Jasmine Solana

Russia prosecutes 3 in first Bitcoin-related criminal case

Three businessmen have found out the hard way that trading bitcoin and other digital currency is not legal—yet—in Russia.

Last week, Kostroma police and Federal Security Service of the Russian Federation (FSB) officers arrested the three businessmen who were found to have illegally traded more than 500 million rubles (US$8.7 million) worth of bitcoin, Russian news outlet Vedomosti reported.

Interior Ministry spokesperson Irina Volk told the news outlet that the three issued more than 300 bank and SIM cards to their relatives to exchange and transfer the cryptocurrency. The three were prosecuted on charges of “illegal banking,” Volk said.

There have been cases in the past when Russian courts have blocked bitcoin exchanges and websites where people could have traded the cryptocurrency to rubles, but last week’s arrests marked the first time that Russia has lodged criminal charges against individual people.

The arrests also come on the heels of reports that the government is looking at restricting its citizens’ access to cryptocurrencies under the guise of consumer protection. Last week, Russia’s Deputy Finance Minister Alexei Moiseev suggested that rather than a currency, bitcoin should be regulated as an asset and should be restricted to “qualified investors,” or those with assets over a yet to be specified threshold.

The proposal’s goal is to help authorities crack down on fraud and money laundering activities, but in the process, it will also halt the growth of digital currency investments from the “ordinary” retail investors, who Moiseev believes are ill-equipped to deal with cryptocurrencies.

For years, Russia’s authoritarian government has been very vocal in opposing digital currency in the country, with ministry officials previously proposing a legislation that would criminalize the use of the so-called “surrogate” financial products. Legislators, however, had a change of heart and have been preparing a new cryptocurrency legislation, which is due in October. A working group in the Russian Parliament is also assessing the risks of allowing cryptocurrency exchange operations in the country.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Satoshi Vision (BSV) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BSV is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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