Ukrainian Officials Burst Network of 'Underground Cryptocurrency Exchange'
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Ukrainian Officials Burst Network of 'Underground Cryptocurrency Exchange'

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1 year ago

In Kyiv this week, law enforcement officials cracked down on an illegally operating crypto exchange.

Ukrainian Officials Burst Network of 'Underground Cryptocurrency Exchange'

The Security Service of Ukraine (SBU) has reportedly raided a syndicate of “underground” cryptocurrency exchanges operating in the capital city of Kyiv. 

According to a Wednesday announcement from the SBU, its agents have blocked the illegal operations of a number of crypto exchangers who allow anonymous payments and withdrawals. The agency asserts that up to UAH 30 million (over $1 million) pass through these platforms every month.

Furthermore, a significant percentage of patronage comes from individuals who receive funds from Russian-based payment service providers such as Yandex.Money, Qiwi and Webmoney, all of which have been banned in Ukraine.

The SBU also claimed that a part of the processed funds was used to fund provocations on the eve of Ukraine’s Independence Day on Aug. 24.

The agency wrote:

“The network has been in operation since early 2021. During that time, it has ‘served’ over 1,000 'customers’ […] It was through this network that they received funding to pay for the "services" of provocateurs.”

The security service conducted five searches in the Shevchenkivsky, Pechersky and Solomyansky districts of Kyiv. During the sting operation, it seized equipment, including computers, cell phones and mobile terminals preventing geolocation. Documents belonging to fictitious entities registered in Ukraine and foreign cash to the tune of 1 million hryvnias (approximately $ 37,000) were also seized.

Operators of these underground cryptocurrency exchange platforms charged a fee of between 5 and 10% on the transferred amount. 

Meanwhile, investigations have linked the activities of the network to illegal behavior, including money laundering. The agency is looking to institute criminal proceedings against all those involved in the network “within the framework of the initiated criminal proceedings” under articles 200 and 209.

This is not the first time officials have targeted illegal cryptocurrency-related activity. Back in April, the agency announced the exposure of a group linked with the illegal transfer of funds. The CEO of HackControl Nikita Knysh, however, dismissed the claims stating that the funds in question were linked to his “partners in another business.”

Similarly, in July, the SBU also claimed to have uncovered Ukraine’s “biggest illegal crypto farm.” It was later discovered that the warehouse in Vinnytsia was a data center legally operated by an IT company.

Away from Ukraine’s clampdown on illegal crypto activities, officials recently passed a bill to treat its central bank digital currency (CBDC) as cash.
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