Corruption

Opposition press links Russian lawmaker to local crypto OTC

Russia’s crypto OTC platform Bankoff has reportedly not only helped officials avoid sanctions but also generated some gains.

A Russian legislator who was one of the authors of the bill to legalize cryptocurrency mining in the country has been tied to local over-the-counter (OTC) exchange Bankoff.

Russian opposition activist Mikhail Khodorkovsky linked Bankoff to lawmaker Andrei Lugovoi in an article by the London-based investigative project Dossier Center on Dec. 19.

The 6,000-word article was accompanied by a video titled “Crypto-Kremlin: How the authorities launder Bitcoin,” released the Khodorkovksy Live YouTube channel.

According to Dossier, Bankoff is the most active peer-to-peer trader using Russian rubles on global crypto exchange Binance. As previously reported, Binance continued to serve non-sanctioned Russians despite the European Union banning all crypto transactions for Russia in October. The Bankoff OTC platform accepts only cash from customers and has almost no Anti-Money Laundering or Know Your Customer controls.

The trader’s office is reportedly on the 65th floor of a building in the Moscow City skyscraper district. The premises belong to the Bratsk Electricity Network, a company that distributes electricity around the east-central Russian city of Bratsk, which is a center of cryptocurrency mining.

According to Dossier, Bankoff could make up to $20,000 daily on up to 4% in commissions on users’ crypto transactions. Lugovoi’s wife, Ksenia Lugovaya, has reportedly also owned a share in Bratsk Electricity Network since 2018. A declaration filed by her husband and purportedly shown in the Dossier video indicates that Lugovaya had an income of 29.6 million rubles (a little more than $400,000) in 2021 with no sources of income other than the Bratsk electric company.

The Dossier article and video also describe how a representative of Dossier was allegedly able to convert 100,000 rubles ($1,400) in Tether (USDT) using the sanctioned Russian crypto exchange Garantex. The representative was reportedly able to send USDT from Garantex to Binance and then successfully transfer to an account in the United Kingdom-based fintech firm Wise, thus enabling the distribution of that money despite sanctions from the United States.

Such a scheme not only allows the Russian government officials to avoid sanctions but also generates money for them, the speaker in the video argues, stating:

“That doesn’t impede Russian officials and members of the security forces from using cryptocurrency not only to take millions out of the country but also to make money from doing it. People who are under the close attention of law enforcement agencies worldwide have long been tied to this.”

While apparently benefitting from crypto themselves, Russian lawmakers have been actively opposing the idea of crypto investment by regular people. The Russian government has not legalized any local cryptocurrency exchange, and the central bank has taken a firm stance against crypto investment.

Related: Putin calls for blockchain-based international payment system

Apart from backing one of the biggest crypto OTC platforms in Russia, Lugovoi is known for developing local cryptocurrency laws. He is one of the authors of the cryptocurrency mining bill introduced into Russia’s lower house of parliament on Nov. 17. Lugovoi began his political career after he was implicated in the poisoning of former Russian security service officer Alexander Litvinenko in the U.K. in 2006.

Additional reporting by Helen Partz.

Thousands petition for congressional investigation of alleged Gensler–SBF links

Ripple defense lawyer John Deaton’s CryptoLaw website has a petition app, and readers are urging Congress to look into a suspicious meeting and other supposedly questionable links.

Almost 4,000 people have used a CryptoLaw petition app to demand that Congress investigate United States Securities and Exchange Commission head Gary Gensler’s “actions in the FTX fraud,” the organization claimed in a tweet on the morning of Nov. 14. 

The CryptoLaw website is run by lawyer John Deaton, who is representing Ripple against the SEC and contributes frequently to the public discourse on the case. The petition reads, in part:

“Evidence has emerged that proves that Gensler met with […] [FTX CEO] Sam Bankman-Fried, before the $14 billion collapse of FTX. Members of Congress have already been informed that Gensler was working with Bankman-Fried to give FTX a regulatory free pass while a massive fraud was going on right under the SEC’s nose. […] It’s time for a full Congressional investigation of Gensler’s role in one of the biggest financial frauds in American history.”

Gensler’s alleged links with bankrupt FTX and Bankman-Fried, also known as “SBF,” began to attract attention practically as soon as the disgraced exchange’s troubles became public. Republican Representative Tom Emmer, who has a long record as a crypto supporter, tweeted on Nov. 10 that “reports to my office allege he [Gensler] was helping SBF and FTX work on legal loopholes to obtain regulatory monopoly.”

Emmer did not elaborate on the source or nature of the reports he referred to, but media reports point to a 45-minute Zoom meeting on March 23 between senior counsel Amanda Fischer and senior adviser Corey Frayer from the SEC and representatives of the IEX stock exchange and FTX, including SBF himself. FTX later invested in the IEX exchange.

El Salvador’s Bitcoin purchase information can’t be made public: Trustee

As a development bank for El Salvador, BANDESAL created a $150 million trust fund to guarantee the convertibility to dollars for citizens and merchants.

Ever since El Salvador legalized Bitcoin (BTC) as mainstream tender, President Nayib Bukele used Twitter on numerous occasions to announce the country’s BTC acquisitions. However, ALAC El Salvador — a non-governmental anti-corruption bureau — was recently denied information from a state development bank, BANDESAL, regarding El Salvador’s Bitcoin purchases and sales.

As a development bank for El Salvador, BANDESAL created a $150 million trust fund to guarantee the convertibility to dollars for citizens and merchants. The request for disclosure of El Salvador’s Bitcoin acquisition was denied on the grounds of confidentiality.

Snippet of BANDSEL’s response to ALAC El Salvador — a non-governmental anti-corruption bureau. Source: ALAC El Salvador

ALAC El Salvador refuted the denial by highlighting that the BTC purchases were made using public funds. Their official statement translated to:

“The confidentiality limits the possibility for citizens to access and receive information on the operations carried out with public funds by BANDESAL.”

In its refusal statement, BANDESAL said that no information related to the Bitcoin Trust (FIDEBITCOIN) could be shared by the trustee or its board of directors to safeguard national interests.

Publicly available information hints that El Salvador purchased 2,301 BTC to date, which has fallen in value over the past year from $103.9 million to roughly $45 million.

Related: Pro-crypto city of Lugano and El Salvador sign economic agreement based on adoption

Adding on to the country’s piling pressure to suffice its year-long Bitcoin purchases, Spain took over El Salvador’s spot to become the third-largest crypto ATM hub in the world.

El Salvador attained the third spot after installing 205 ATMs to support the country’s thriving Bitcoin economy, amounting to a network of 212 crypto ATMs. However, Spain recently recorded 215 active ATMs, representing 14.65% of European installations.