sanction - Pwim.Net

Digital Currencies Impede US Treasury Sanction Efforts, Report says

A new report issued by the United States Treasury Department revealed that digital currencies are posing a critical impediment to its sanctions policies, a trend it is determined to put an end to.

Cryptocurrencies as a Tool to Bypass U.S. Sanctions

Per the 9-page report, the Treasury Department highlighted digital currencies as one of the primary technological innovations that make its sanctions efforts ineffective.

“Technological innovations such as digital currencies, alternative payment platforms, and new ways of hiding cross-border transactions all potentially reduce the efficacy of American sanctions. These technologies offer malign actors opportunities to hold and transfer funds outside the traditional dollar-based financial system,”

The report also reads, adding that these cryptocurrencies “also empower our adversaries seeking to build new financial and payments systems intended to diminish the dollar’s global role. We are mindful of the risk that, if left unchecked, these digital assets and payments systems could harm the efficacy of our sanctions.”

The U.S. Dollar, as the reserve currency, is considered as part of global integration. The United States has long utilized financial sanctions to weaken state actors and non-state actors, such as political entities, that seem to threaten the country’s national security. Amongst the countries under related sanctions is Afghanistan, in which the U.S. froze billions of dollars since the Taliban took over the country’s regime.

Many sanctioned countries, including North Korea and Venezuela, are already exploring alternatives through digital currencies, a move that has proven to be of grave concern to the U.S. Treasury Department.

Cryptocurrencies: Tool for Financial Freedom

One of the primary goals of digital currencies like Bitcoin (BTC), Ethereum (ETH), and Tether (USDT) is to serve as a tool for financial freedom for everyone. Cryptocurrency transactions occur in a peer-2-peer manner and cannot be blocked by any financial regulator as they appear on the blockchain, which is not under the control of one entity.

While the U.S. perceives digital currencies as a flawed tool that it hopes to learn more from to mete out its sanctions, adopters of the technologies consider crypto as one of the most innovative discoveries in the 21st Century, with all thanks to Satoshi Nakamoto.

China's CCP Official Expelled for Violation Crypto Mining Ban Provisions

A former member of the CPPCC (Chinese People’s Political Consultative Conference) got fired by touching Beijing’s nerve. Xiao Yi, a former advisory member of CCP has been expelled from the party in what appears to be the first full-blown sanction of an official that violated Beijing’s stance against cryptocurrency mining.

Per the translated version of the Central Commission for Discipline Inspection (CCDI) report, the sanctioned official was accused of many crimes ranging from abuse of power to illegal monetary transactions and mining digital currencies without recourse to the environmental damage it may have caused.

“[Xiao Yi] violated the new development concept, abused power to introduce and support enterprises to engage in virtual currency “mining” activities that do not meet the requirements of the national industrial policy,” the CCDI report reads.

China implemented its zero-tolerance policy for Bitcoin mining with a series of crackdowns on miners that finally led to the exodus of mining firms from the Asian nation. Beijing’s negative stance about crypto miners is fueled by the supposed environmental impact as the majority of the nation’s power source comes from coal.

With the Chinese Communist Party’s clampdown on mining, party members and especially officials were ethically expected to abstain from Proof-of-Work (PoW) mining, making the Xiao Yi offence more grievous.

“Xiao Yi seriously violated the party’s political discipline, organizational discipline, integrity discipline, work discipline, and life discipline, and constituted a serious job violation and was suspected of taking bribes and abusing power,” the report reads.

In addition to expelling Xiao Yi from the party, the disciplinary committee said it has referred the case for additional legal sanctions.

“He was expelled from public office by the State Supervision Commission; his qualifications as a representative of the 19th National Congress of the Communist Party of China and the 14th Party Congress of Jiangxi Province were terminated; his income from violations of discipline and law was confiscated; his suspected crimes were transferred to the procuratorial organ for review and prosecution in accordance with the law,” the party concluded.

Over the coming months, more related sanctions for offenders of the Bitcoin mining ban may become a trend in no time.

U.S. Requests Crypto Exchanges to Avoid Russian Running away from Sanctions

The U.S. is reportedly urging major crypto exchanges to make sure no Russian individuals or institutions escape from the sanctions by using cryptocurrencies, according to Bloomberg.

Citing to personnel with direct knowledge of matters, the Biden’s administration– including the Treasury Department and National Security Council from the White House, are discussing with leading crypto exchanges, such as Binance, FTX Trading Ltd and Coinbase Global Inc., asking these exchanges to “thwart any attempts to sidestep the stiff restrictions levied by the U.S. and its allies after Russia invaded Ukraine last week, ” report disclosed. A White House official said the U.S. government is working actively to “fight any misuse of digital assets to avoid sanctions.”

Binance’s spokesperson responded that the company had identified crypto wallets of sanctioned individuals and would not block all Russian addresses. Coinbase, on the other hand, replied that the firm “is blocking transactions to or from the prohibited address identified by Treasury’s Office of Foreign Assets Control”, adding that the exchange has labelled specific addresses as possibly being controlled by sanctioned individuals or entities.

Bitcoin Price Rebounds amid economy sanctions

Meanwhile, the price of Bitcoin has been rebounded above the $43K level after a series of economic sanctions imposed on Russia.

Mikkel Morch, Executive Director & Risk Management at crypto/digital assets hedge fund ARK36, explained:

“In percentage terms, Bitcoin recorded the largest daily candle in more than a year, gaining more than 18% day-over-day at the highest point of the rally. While it seems that the second leg of the move was at least partially fuelled by a small short-squeeze, overall, the rally was driven by a huge spike in demand,”

Part of the reason for the latest surge could be thanks to the adoption of crypto has increased as the means of donations. For instance, Binance has announced to donate over $10 million worth of crypto to Ukraine.

In addition, Morch further indicated that:

In view of that, yesterday’s rally may have a deeper significance for the Bitcoin use case. The biggest crypto asset is now looking at a potential decoupling from risk assets and it is doing so at a time of unprecedented uncertainty. Cash used to be king in times of crisis but now rising inflation levels and broader macroeconomic woes make holding large amounts of cash risk in and of itself.

After a series of sanctions imposed on Russia, including banning some of the Russian banks’ access to SWIFT, a so-called nuclear weapons class restriction, the Russian Market appeared the sell-off of Ruble, resulting in FUD sentiment.

Some analysis said capital is moving forward to cryptocurrencies for shelters to escape after experiencing a crash when the war outbreak.

Subject to the ongoing war with Russia, Kyiv has been accepting crypto for donations, urging the world for crowdfunding to help them resist the Russian invasion.

Russia Might Resort to Bitcoin Mining as Sanctions Continue to Bite

Based on the ripple effect of sanctions slapped on Russia because of its ongoing invasion of Ukraine, Russia continues to be starving for foreign currency. It might make Bitcoin mining an alternative to bypass sanctions.

Nevertheless, Russia might take the Bitcoin (BTC) mining route based on its rich resources so that it gets out of the woods, as reported by Bloomberg.

David Carlisle, the director of policy and regulatory affairs at Elliptic, explained:

“It wouldn’t be a stretch for the Russian government or certain sanctioned entities to look to mining as a way to get access to Bitcoin. They could be translated to goods and services or just hard cash.”

Countries that are already facing sanctions like Iran have turned to crypto mining. For instance, nearly 4.5% of BTC mining happened in the nation in 2021, generating $1 billion in revenue.

Therefore, Iran is converting its sanctioned energy into hard currency and Bitcoin, and Russia might borrow a leaf.

Nevertheless, French Finance Minister Bruno le Maire recently disclosed that the European Union (EU) is looking at ways of ensuring that Russia would not bypass sanctions through crypto.

President Vladimir Putin’s administration has shown receptiveness to crypto-related activities despite a firm stance by the nation’s central bank. For instance, the Russian Finance Ministry suggested that crypto should be regulated, not banned.

Analysts have noted that Bitcoin is emerging as the global digital collateral based on the Russia-Ukraine war.

Bloomberg’s Senior Commodity Strategist, Mike McGlone, recently stated that the Russia-Ukraine conflict “may mark another step in Bitcoin’s maturation toward becoming the global digital collateral.”

This is founded on the fact that both Russians and Ukrainians use cryptocurrencies like Bitcoin for offshore transactions based on the geopolitical turmoil witnessed.

Recently, LocalBitcoins, the world’s leading peer-to-peer Bitcoin marketplace, cut fees to zero for Ukrainians locally and abroad.

Switzerland to Freeze Crypto Assets Linked to Russians

On Friday, the federal government of Switzerland announced plans to freeze all crypto assets held within its borders that are owned by Russian citizens and businesses sanctioned by the European Union.

On Friday, the federal council stated it plans to match the latest series of sanctions already imposed by the EU in response to Russia’s invasion of Ukraine.

In the past week, Guy Parmelin, Swiss Finance Minister said that Switzerland has frozen bank accounts and physical assets owned by 223 Russians, including close associates of President Vladimir Putin. “As of today, all four of the EU’s sanctions packages have been adopted and implemented. Since Monday, bank accounts and assets of 223 Russians, including oligarchs and close Putin confidants, have been identified and frozen within the country,” Parmelin disclosed.

A senior official at the finance ministry further mentioned that freezing crypto assets was essential because Switzerland wants to protect the integrity of its cryptocurrency industry. “If someone holds their crypto key themselves, then, wherever they are, it’s going to be virtually impossible to identify them. But if they are using crypto services — funds, exchanges and so on — these service points we can target,” the official stated.

Embracing Crypto Culture

Switzerland, which has long been a global economic hub, is now embracing the potential of cryptocurrencies and digital tokens. The country is friendly to cryptocurrency and blockchain and is home to numerous industry companies and sensitive regulations to the sector.

Last year, Switzerland, commonly known as “Crypto Nation”, updated a range of company and financial laws to give blockchain commerce a solid legal basis. The Swiss Financial Market Supervisory Authority (FINMA) licensed two of Switzerland’s crypto banks, a crypto assets fund, and a crypto stock exchange in the last two years.

Blockchain finance firms such as the Netherlands-based AllianceBlock and US-based Fireblocks are now springboarding into Switzerland. Deutsche Börse, which runs the Frankfurt stock exchange, acquired a controlling stake in Swiss regulated brokerage Crypto Finance.

Part of the reason is that friendly crypto regulation has given a solid foundation for building businesses in Switzerland.

US President Joe Biden to Sign Executive Order on Crypto this Week

According to several people familiar with the White House’s deliberations, U.S. President Joe Biden is expected to issue an executive order on cryptocurrency this week. The move will mark the first step toward regulating how crypto assets are traded.

The action by the White House comes as, in recent weeks, U.S. administration officials have raised concerns about Russia’s use of crypto assets to evade the impact of sanctions in response to its invasion of Ukraine. The sanctions have closed the country’s stock market and sent the ruble to historic lows.

Two people familiar with the process have disclosed that the executive order on cryptocurrency is expected to be issued this week. The order will describe what government agencies, including the Treasury Department, should do to create policies and regulations on digital currencies. It is also expected to develop policies to enable the U.S. government to work with foreign powers to regulate crypto and its trade across international borders.

Furthermore, the order will ask other agencies, including the Financial Stability Oversight Council the Treasury Department, among others, to analyze the use of cryptocurrency in financial crimes and its impact on the environment.

Besides that, the order will also direct agencies to build on efforts by the Federal Reserve to study the possibility of launching a new central bank digital currency.

In January, the Federal Reserve issued a report that discussed the risks and benefits of U.S.-backed digital currency.

U.S. officials have remained concerned about Russia’s ability to use cryptocurrency to evade sanctions. Crypto is one of several spaces that the Biden administration is looking to beef up as it attempts to ensure that sanctions on Russia have maximum impact.

The order appears neutral on the issues of cryptocurrencies as a whole. It hints that the U.S. will not go in the direction of banning the use of technology. In the recent past, as reported by Blockchain.News. Several countries, including China, issued a complete ban on cryptocurrency within their jurisdictions.

The implication in the order is that cryptocurrency will remain a part of the U.S.U.S.nomy for years to come. The order signals that regulations are underway. It means that significant changes are on the way to how the U.S.U.S.overnment handles a technology that has until now seen its development majorly driven by private businesses.

Virgil Griffith Sentenced to 5-Year Jail for Helping Individuals in North Korea Evade Sanctions

The strong hands of the law have been stretched to Virgil Griffith, an American national and one of the Ethereum core programmers, who is sentenced to 63 months in jail by U.S. District Judge P. Kevin Castel for allegedly helping individuals in the Democratic People’s Republic of Korea (North Korea) evade the US imposed sanctions.

The relations between North Korea and the United States remain intense as North Korea is reportedly still active with its nuclear program, which is still under sanctions by the United Nations. Based on this, the U.S. government enacted the International Emergency Economic Powers Act (IEEPA) to prevent U.S. entities from doing business or selling technologies that can aid North Korea’s threats.

Despite knowing this, the Department of Justice (DoJ) said in its announcement that Griffith and his co-conspirators have developed and managed technologies that can help North Korean individuals mine crypto and eventually evade sanctions. The DoJ revealed that against the approval of relevant authorities, Griffith not just travelled to North Korea by offering services directly to the country, but he also had sought to recruit other American citizens to do the same.

“There is no question North Korea poses a national security threat to our nation, and the regime has shown time and again it will stop at nothing to ignore our laws for its own benefit. Mr. Griffith admitted in court he took actions to evade sanctions, which are in place to prevent the DPRK from building a nuclear weapon. Justice has been served with the sentence handed down today,” said U.S. Attorney Damian Williams.

Griffith, 39, pled guilty to the charges levied against him, and following his sentence, he will be placed on 3 years of supervised release atop a $100,000 fine. The DoJ is known to be proactive when it comes to high-profile fraudulent cases featuring crypto-linked entities. One of the crackdowns launched by the DoJ in recent years involves former BitMEX co-founder and CEO, Arthur Hayes, who promptly resigned from the role following the criminal charges levied against him and other executives of the trading firm.

Compass Mining to Sold $30m Worth of Assets in Russia to Fend Off Sanctions

Compass Mining, an American cryptocurrency mining firm, is looking for buyers for its gears stranded in Russia in a bid to avoid being sanctioned by the United States Department of Treasury.

According to a Bloomberg report, citing Compass Mining’s Chief Executive Officer, Whit Gibbs, the mining facility it operates in Siberia hosts about 12 megawatts of capacity.

Compass Mining hosts a data centre that houses mining machines for its diverse clients worldwide. Each of its clients has an average of 5 devices that it is managing for them. The price tag on the pieces of mining equipment in the Russian region is pegged at $30 million, and Gibbs is hoping that he would recover most of the value of the assets, which will then be redistributed to the owners.

The company is searching for buyers in Russia, seeing it will not be able to ship out the mining gears per the broad sanctions, which also affect the global supply chain connecting Russia. According to the Bloomberg report, the urgency to sell off the assets became necessary when the Treasury Department sanctioned BitRiver, a Switzerland-based crypto mining firm, for its operations in Russia.

While the Treasury’s sanctions have been criticised by BitRiver’s CEO, Igor Runets, who believes the sanctions are unfortunate and are an attempt to “change the global balance of power in favour of American companies,” Gibbs will not want to be a scapegoat for other American outfits to learn from.

The Russian invasion of Ukraine has stirred a lot of negative reactions for the former nation, which has remained adamant concerning calling off the ongoing war. From financial companies like Mastercard and Visa to crypto mining pools like FlexPool, the caution being taken by Compass Mining will prevent it from falling into the crosshairs with the Feds, a move that is necessary to power its future growth plans.

Iranians Permitted to Trade on Binance, Despite US Imposes Sanctions: Reuters

A recent report from Reuters is yet again indicting Binance, the world’s largest cryptocurrency trading platform.

The report said the exchange permitted Iranian users to trade on its platform after the United States reimposed sanctions on the country in 2018.

According to the authors of the report, as many as 7 Iranians have confirmed that they maintained the use of the Binance platform from the time of the sanction back in August-November 2018 until September last year. Many of those who spoke to Reuters acknowledge the ease of use of the Binance platform which further offers very robust liquidity for a wide range of crypto assets.

Back in 2015, Iran inked a nuclear pact with world dealers making the US and other Western allies taper down some of their sanctions on the country at the time. The US reimposed the sanctions when the withdrawal of US by former President Donald Trump from the Iranian peace deal. The setback of these sanctions fueled a massive decline in the Iranian economy, and an attractive basis for traders to rely on cryptocurrencies, through the Binance exchange.

Access to the Binance platform by the Iranian traders was cut off around last year September. However, the trading platform according to lawyers who spoke to Reuters stands a risk of being investigated by the US government. Although there is a point of whether the usage of the exchange was primarily focused on users using the trading platform to circumvent the sanctions, a trend can tell if Binance will go scot-free.

Binance is always in the cross-hairs with the media when it comes to its operational ethics. Reuters has been particularly interested in Binance, as the renowned media outfit said back in June, this year that Binance was used as a conduit for money laundering and has facilitated as much as $2.4 billion in transactions.

Binance has denied these claims as well as other claims flying around with a confirmation that the exchange is renewing its approaches to maintain a healthy relationship with regulators. This is seen in the series of approvals to operate in key economies the firm has received, the latest of which is Spain.