Russian Exchanges Exposed in Cash-for-Crypto Scandal
An investigation into digital asset exchanges in the Russian capital has exposed the cash-for-crypto scandal nexus. Exchanges have been found to swap stablecoins for British pounds in the UK. Transparency International Russia reveals in a report that the transfer of funds usually does not involve the identification of the clients.
Crypto Exchanges in Moscow Swap Stablecoins for British Cash
Russian
crypto exchanges that can transfer money abroad without following
know-your-customer (KYC) procedures and anti-money laundering (AML) regulations
are the focus of a study conducted by the Russian Chapter of Transparency
International. The results of the study were presented in a new report
published on Wednesday.
The
researchers in the study group were able to identify more than 20 trading
platforms operating from the Moscow International Business Center, commonly
referred to as Moscow City. Through conversations with operators, they also
found that eight of them were ready to exchange US dollar-pegged stablecoins
for British pounds and hand over the cash to recipients in London.
The study group noted that one of them is Suex, a crypto broker blacklisted by the US Treasury Department’s Office of Foreign Assets Control (OFAC) in September 2021 for facilitating ransomware-linked transactions. They also mention that a platform called Pridechange sent significant amounts of money to Garantex, another blacklisted exchange with offices in Moscow City.
Modus Operandi of Transfers
The
modus operandi of the transfers is quite similar in all cases. The exchanges provide customers with a wallet address to send the amount in tether (USDT). On confirmation of the payment, the operator
dispatches a Russian-speaking courier to a specified location in London to
deliver the fiat cash on the same day or the following day.
The UK
anti-money laundering regulations require registering cryptocurrency exchanges and carrying out due diligence checks on customers. Transparency’s
undercover researchers discovered that none of the Russian platforms ever asked
to verify the customer's identity, despite the transactions
exceeding 10,000 British pounds (USD 12,000).
During
its interactions with the crypto exchanges, the organization was able to obtain
the crypto addresses used for the transfers. The transaction history reveals
that the average monthly amount of transactions through such wallets vary
between USD 420,000 and USD 470,000. The estimate is based on the USDT turnover, while another stablecoin USD coin
(USDC) was also used in similar transactions.
"The
results of our study suggest that at least a few shadow OTC crypto exchanges
operate in the UK and are ready to provide cash without performing necessary
KYC procedures... The full scale of this activity may be unknown, but it
deserves closer scrutiny," an excerpt of the report concludes.
What
is your take on Russians actively using crypto exchanges to swap
stablecoins for British pounds amid financial restrictions over the Ukraine
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