How Russia Can Overcome Sanctions With Cryptocurrencies

with the The war in UkraineCryptocurrencies seem to be becoming particularly popular on both sides of the fray. From the Ukrainian side for the purpose of assembly economic support all over the world. On the Russian front, due to the devaluation of the currency rubles and international sanctions. But there is a danger in emerging. Russia can already use these coins with a purpose circumventing the same penalties. This wouldn’t be the first time this had happened.

North Korea wallpaper

A cryptocurrency is a decentralized, parity-based digital currency whose implementation is based on cryptographic principles to validate transactions.

Just a few days ago, Virgil Griffith, the hacker and developer of a software Ethereum Foundation – which deals with the development of the blockchain ether (the second cryptocurrency by market cap) – was sentenced by a US court More than five years in prison. The crime attributed to him is conspiracy to violate the international sanctions imposed on him North Korea.

in the context of Conference on Blockchain and Cryptocurrency in Pyongyang, the capital of Kim Jong Un’s country, Griffiths could have revealed how digital technology can be used to circumvent decisions made by the Western world. It is not known exactly what he said, but it did happen that the system tried to exploit cryptocurrencies for this purpose.

In 2020, a US court has already ruled Three North Korean officers For attempting to raise funds in violation of US sanctions through an ICO. This is ‘Initial coin offering (Initial Coin Offering): The crypto-world correspondent to the initial public offering in which companies are listed on the stock exchange.

the new Code It was meant to represent the ownership of parts of merchant ships. The three were also convicted of theft Viruses and cyber attacks The equivalent of several million dollars. According to the United Nations, these thefts represent basic income to finance Missiles and the nuclear program Pyongyang. And in recent years, most of the operations have focused on cryptocurrencies. Chain analysis estimates that during 2021, North Korean hackers nearly robbed 400 million dollars. But in 2022, with one attack, they actually managed to steal it 600.

Other ways to evade penalties

in 2018 Venezuela From Maduro created a country cryptocurrency (the so-called CBDC, central bank digital currencies) specifically to circumvent sanctions. So Trump issued an executive order to All transactions are prohibited Manufactured by US citizens or on US soil “with any digital currency, digital currency or digital code issued by, for, or on behalf of, the Venezuelan Government”.

Country Cryptocurrency

Called digital currencies (CBDC), they are central banks’ response to cryptocurrency and could launch a revolution

Cryptocurrencies, by their nature, can be transferred without restrictions. However, the exchange Central (“stock exchanges”) – that is, those operated by a company – are able to Transaction block. And that’s what they did, for example Binance and Coinbase After the Russian invasion. for yearsOffice of Foreign Assets Control – US Department of the Treasury that deals with enforcement of sanctions – Added to List of Restricted Entities Also some titles Pocket wallet (Digital “wallets” in which cryptocurrencies are held).

Also, since companies have data such as a user’s location at their disposal, they must block transactions From or to sanctioned countries. Last year, BitPay, a US company that provides payment management services, was fined precisely for not blocking some from (or directed at) Cuba, North Korea, Iran, Syria, Sudan and Crimea.

Finally, too Mining (mining new cryptocurrencies) can be beneficial to countries rich in fossil resources. Iran He knows it well: since sanctions prevent him from exporting oil and gas to Western countries, the Arab country is investing these resources by undermining bitcoin. which they then pay for imports and thus manage to circumvent the restrictions placed on their financial institutions.

What (cannot) Russia do

First of all, Moscow can follow the example of Tehran. In August, Russia was The third country in the world In the Mining Bitcoin, after the United States and Kazakhstan. As the analysis of the series always mentions, since the beginning of the year there has been an increase in the value mined in Russia compared to that in Iran. Although it is unlikely that the sanctioned Russian entities have actually been able to increase their ability to… MiningHowever, it is possible that they are trying. And in fact, just a few days ago, the US Treasury imposed sanctions on Petriver, Society Mining Russian Based in Zurich.

As for the Russian oligarchEven if it was theirs Pocket wallet They are not banned, it is difficult for them to be able to convert money into digital currencies and vice versa. Or at least not in large quantities. This is because all blockchain transactions are recorded and anyone can access them. Therefore, if a Russian account tries to transfer a large amount It will not go unnoticed. On the contrary, the operations of small sects (but we are talking about millions) do not pay much attention. In fact, this is what usually happens laundered money With cryptocurrency.

Moreover, it must be considered that the Russian economy is much larger than that of Iran and North Korea. The total assets of the Russian banking system are worth about 1.380 billion eurosCurrently, the total cryptocurrency market capitalization is around 1.630 billion. This means that cryptocurrencies alone are unable to mitigate the negative impact of sanctions and sustain the economy in the long term. But they can still help in the short term.

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