Transparency International, a Russian anti-corruption NGO, has discovered at least eight over-the-counter (OTC) brokers in Moscow who are trading tens of thousands of dollars’ worth of stablecoins for cash without the need for know-your-customer (KYC) documentation. After the U.S. and European nations cut off Russia from the global financial system in the wake of the invasion of Ukraine in February 2022, these stablecoins are an appealing way to transfer money out of Russia because they can be exchanged in the U.K. for pounds sterling.
Some Russian banks still retain access to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), however their transactions are frequently delayed. The larger Russian banks, however, have been cut off from the system.
According to Transparency International, the brokers it studied processed between $420,000 and $470,000 a month. A number of cryptocurrency exchanges, including Huobi, Binance, WhiteBit, and two Russian exchanges, MEXC and Garantex, which were sanctioned by the United States in April 2022, were among the recipients of payments from and transferred to the most active wallets. It has been discovered that some OTC brokers conduct cash trades in a number of places around Europe, the United States, and Russia. Also, it was found throughout the inquiry that Trust-exchange, an OTC offering to convert USDT for euros in Prague, has handled more than $3.7 million since last April.
Users who utilise these brokers run the danger of losing money since they have to believe the anonymous counterparty hiding behind a Telegram alias, who delivers the cryptocurrency first and gets paid hours later. Political sanctions often fall short of totally halting the flow of unidentified cash, even though they can restrict financial flows to a penalised nation.
The U.K. was the focus of Transparency International’s investigation because it has long been a popular place for Russian money stashed abroad. Roman Abramovich and other Russian oligarchs have a history of investing their riches in lavish homes and soccer teams in the United Kingdom. There are ways to transfer tens of thousands of dollars across the Russian border without disclosing them to customs authorities, despite the European Union’s restriction on Russian nationals using European cryptocurrency services.
The findings imply that in order to stop money laundering and illegal activities, regulators and authorities must be diligent in keeping an eye on these kinds of transactions. As the bitcoin market expands, regulators face new difficulties and have to put up greater effort to stop criminal activity.