Russia to Conduct First Criminal Case in Involving Bitcoin

Russian authorities have opened the nation’s first criminal case involving bitcoin. Russian police arrested three men for illegally trading 500 million rubles ($9 million USD) worth of bitcoin last week.

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Russia Has Opened Its First Criminal Case Involving Bitcoin Against Three Men Accused of Conducting “Illegal Banking”

Three Russian men have been arrested in Kostroma under charges of “illegal banking” for unlicensed bitcoin trading. This occurred following the discovery of irregular activity relating to approximately 300 bank cards and sim cards. Prosecutors believe that the accused were circulating money through the accounts of family members in order to obscure the financial trail related to their bitcoin trading activities. The men were arrested by Kostroma local police and Federal Security Service officers.

Despite recent rhetoric from Russia suggesting that the nation will move toward developing a tightly controlled but permissive regulatory apparatus pertaining to cryptocurrency, trading rubles into bitcoins or other cryptocurrencies today is legally a gray area. Russia’s deputy finance minister, Alexei Moiseyev, has recently proposed solely allowing “qualified investors” to access cryptocurrency trading services, stating that it is imperative that the state is “able to track deals and transactions in these currencies.”

Russian Authorities Have Not Previously Pursued Private Individuals Regarding Unlicensed Cryptocurrency Trading

Many within Russia’s cryptocurrency community have pointed to clear regulations as the best way for authorities to tackle unlicensed bitcoin trading. Bitcoin Fund founder, Anatoly Knyazev, is reported to have told Russian media that “if in Russia it was possible to legally transfer cryptocurrency into [Rubles]… then… people would not have to use the services of the detainees”.

The criminal case has been described as the Russia’s first to involve bitcoin by Artem Kozlyuk, of public organization Roskomvobodda. Kozlyik is reported to have stated that “previously, Russian courts blocked bitcoin-exchanges and sites where it was possible to transfer the digital currency to ordinary currency, but did not pursue individual people.”

With Russia moving toward developing a strict regulatory regime regarding cryptocurrency, it is likely that the nation will use coercion in order to reduce undesired usage of cryptocurrency.