Russian authorities continue to target Bitcoin-related activities

Maria Nikolova

Prosecutors have issued a warning to a businessman in Kazan, Tatarstan, over deploying Bitcoin selling machines.

The Russian authorities continue their onslaught against Bitcoin-related activities. On November 16, 2017, the Office of the Tatarstan Prosecution announced that a warning had been issued to a 34-old local businessman who deployed two machines for selling Bitcoins in his stores.

In their press release, the prosecutors noted that at the present moment the legal status of cryptocurrencies is not defined in the Russian Federation. Any offering of virtual currency exchange by Russian entities is considered an involvement in suspicious practices in breach of the anti-money laundering and counter-terrorism financing laws.

The investigation continues, with the prosecutors now checking the firm who supplied the Bitcoin machines.

This is not the first time that the Russian authorities act against Bitcoin-related operations. In August this year, one of the founders of farmers’ co-op LavkaLavka was invited by Russian prosecutors for a “chat”, with the questions revolving around Bitcoin acceptance by the entity. In the end, the prosecutors could not find any violations in the actions by LavkaLavka but did warn the owner that Russian laws permit only Ruble acceptance and that money surrogates are prohibited.

The concerns are mounting over the growing number of cryptocurrency scams in Russia. In September, Officers of the Criminal Investigation Administration of the Russian MIA Administration for the Kostroma Region together with the Russian FSB Administration for the Kostroma Region apprehended three gang members involved in illegal banking through using an international payment system and a bitcoin exchange platform. The gang members were charged with law violations subject to Part 2 Article 172 of the Criminal Code of the Russian Federation. The court has issued a restraining order to the detained men.

Recently, Sergey Shvetsov, First Deputy Governor of the Bank of Russia, said that the central bank and the prosecutors are working together to close the foreign websites that offer Russian residents to buy cryptocurrencies.

Mr Shvetsov added that all derivative instruments related to cryptocurrencies are seen as negative phenomena by the “Megaregulator”. The central bank is not supporting these instruments and will implement measures to limit all operations with them for the regulated part of the Russian market. He reiterated that these instruments bring very high risks for the Russian citizens and businesses. Moreover, he noted, Bitcoin has become a means for getting artificially high returns for a very short period of time, something that is characteristic of financial pyramids.

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