Just when things are looking up for Bitcoin and cryptocurrency in Russia, bad news arrives. In the first-ever criminal case in Russia related to the sale of bitcoins, three men have been arrested for generating US$9 million worth of Bitcoin sales over the past few years.
Illegal Bitcoin Sales in Russia
Although buying and selling Bitcoin in Russia is not illegal, it can still lead to scrutiny by law enforcement officials. Three men were arrested late last week for their involvement in large-scale Bitcoin sales. The men allegedly traded over 500 million Russian rubles worth of Bitcoin, which equals around US$9 million. That in itself is not exactly suspicious, although the amount raises a lot of questions for an unlicensed operation.
It is the first time people have been arrested for selling Bitcoin in Russia. This would seem to indicate there is a valid reason for why this is taking place right now. According to the Vedomosti newspaper, there is a criminal case being built against these three Bitcoin sellers. Cryptocurrencies should never be used for money laundering or tax evasion purposes unless one wants to attract the attention of government officials. According to Russian sources, the three men sold Bitcoin for rubles and have been charged with “illegal banking”. After all, they processed a high volume of trades without having a license or paying taxes on profits.
Although the names of these three individuals have not been made public, it is highly doubtful they are tied to any known cryptocurrency exchange. Investigators noticed an unusual amount of activity in bank accounts linked to around 300 bank cards and SIM cards. All of these trades have ties to Bitcoin activity, by the looks of things. Additionally, some of the money was allegedly moved into bank accounts belonging to family members of the men, although the latter point has not been proven.
Even though this is the first criminal case in Russia involving Bitcoin, authorities have a spotted past when it comes to the popular cryptocurrency. In recent years, authorities blocked Bitcoin exchanges and websites where Bitcoin could be transferred to and from rubles. No one was ever brought up on criminal charges for doing so, though, which has always been rather surprising. After all, the authorities had information about both the buyer and the seller in hand, but never pursued legal action for some reason.
Given the surge in popularity of both Bitcoin and Ethereum – even in Russia – both cryptocurrencies are facing additional scrutiny from state officials right now. The government wants to prevent tax evasion associated with cryptocurrencies, which has been pretty difficult to do so far. It seems these three arrests are just the first step in a renewed effort to bring tax evaders to justice. It is unclear if Russia has any official tax guidelines for Bitcoin and other cryptocurrencies, but it appears they do.
All of the evidence collected so far hints that the three individuals had been conducting some form of illegitimate transactions. Right now, Russian citizens cannot officially convert Bitcoin into Russian rubles, although there are ways to do so. Converting US$9 million worth of BTC to rubles without attracting the attention of law enforcement officials is essentially impossible. It is unclear how much jail time these individuals face right now or when their court hearing will take place.