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CNN: 'Financial Sanctions are Easier Than Ever for Russians to Evade. Thank Bitcoin' (cnn.com) 85

Posted by EditorDavid from the easy-money dept.
Financial sanctions are easier than ever for Russians to evade. Thank Bitcoin CNN: 'Financial sanctions are easier than ever for Russians to evade. Thank Bitcoin' The senior editor of CNN Business writes: The West's initial salvo of financial sanctions against Russia failed to deter President Vladimir Putin from launching a full-scale invasion of Ukraine. Now the United States is taking a punitive approach, announcing another round of sanctions meant to tighten the screws on Russian banks and "corrupt billionaires." But some experts say those measures, which so far do not target Putin himself, are becoming increasingly easy to evade, thanks in part to a surge of cryptocurrency adoption in Russia.

The U.S. and EU sanctions rely heavily on banks to enforce the rules. If a sanctioned business or individual wants to make a transaction denominated in traditional currencies such as dollars or euros, it's the bank's responsibility to flag and block those transactions. But digital currencies operate outside the realm of standard global banking, with transactions recorded on a public ledger known as the blockchain. "If the Russians decide — and they're already doing this, I'm sure — to avoid using any currency other than cryptocurrency, they can effectively avoid virtually all of the sanctions," said Ross S. Delston, an expert on anti-money laundering compliance.

The U.S. Treasury is well aware of this problem. In an October report, officials warned that digital currencies "potentially reduce the efficacy of American sanctions" by allowing bad actors to hold and transfer funds outside the traditional financial system. "We are mindful of the risk that, if left unchecked, these digital assets and payments systems could harm the efficacy of our sanctions."
Meanwhile, the BBC reports Ukraine has received at least $11 million in anonymous bitcoin donations to support its war effort — with Forbes noting that includes $1.9 million from a wallet also associated with an auction of NFTs raising funds for WikiLeaks founder Julian Assange.
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CNN: 'Financial Sanctions are Easier Than Ever for Russians to Evade. Thank Bitcoin' More

CNN: 'Financial Sanctions are Easier Than Ever for Russians to Evade. Thank Bitcoin'

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  • Financial sanctions are easier than ever for Russians to evade. Thank Bitcoin CNN: 'Financial sanctions are easier than ever for Russians to evade. Thank Bitcoin

    It's not often you get a dupe in the very same article.

    But anyway: I don't see why this would be a surprise. Cryptocurrency has been the method of choice for criminals and less-than-savoury organisations to move money around for a while now, almost since its inception.

  • If governments can manage to stop & trace crypto from criminals, surely they can do it from Russia’s attempts to evade sanctions

    • Re: (Score:2)

      by JcMorin ( 930466 )
      To seize bitcoin you need to get the private key (like a password). Either via seizing the computer or get someone say the password of the encrypted wallet. Else there is no way to seize bitcoin from distance. Once you have the private key, you can move the bitcoin to another address under your control.

      • Re: (Score:2)

        by jythie ( 914043 )
        On the other hand, at some point in order to be useful for evading sanctions it has to be converted back to something else, and it could be seized at whatever point that is.

        • Re: (Score:2)

          by jvkjvk ( 102057 )

          Or exchanges could be banned from converting known bad coins into USD. At least exchanges which may fall under the say of the US.

  • The article is correct cryptocurrencies do make it easier to evade financial sanctions. But there's a catch.

    Crypto is actually terrible for money laundering. You pretty much need the exchanges to cash out any significant amount of money or to do any very large transactions. In a peer-to-peer transaction it's remarkably easy to commit fraud. This is why valve saw 50% fraud rates with Bitcoin when they took it briefly and it's also why they stopped taking it, apart from the volatility.

    What this means

    • This is why valve saw 50% fraud rates with Bitcoin when they took it briefly and it's also why they stopped taking it, apart from the volatility.

      It was apparently a bit more complicated than that. [ycombinator.com] It's also not a problem exclusive to cryptocurrency, which is why if you've ever been behind someone paying by check at a grocery store, you'll be slightly delayed while the cashier electronically verifies that the check. The thing is, confirming BTC transactions is slow as snot, so Steam was just letting it slide and sorting it out after the fact (kind of like what AOL did, which lead to a similar billing exploit [wikipedia.org].

      So bizarrely glad Putin might have just killed Bitcoin.

      The biggest problem Russia would have t

      • The biggest problem Russia would have trying to use Bitcoin on any grand scale is liquidity. There's only so much you can buy or sell without your own actions influencing the value.

        There is also the issue of getting buyers and sellers outside of Russia to accept crypto in leau of other payments. I doubt many companies would risk getting caught and suffering legal repercussions just to continue selling to Russia. Then of course, even if they do there's the issue of shipping goods. CNN starts with saying because people use crypto to buy illegal items such as drugs, Russia could use that in normal commerce; but then goes on to say how hard it would be to use crypto to buy and sell large

    • Here you're confusing exchanges freezing accounts with 51% attacks which is a miners thing. Interesting.

    • Re: (Score:2)

      by nasch ( 598556 )

      It's Ukraine, not the Ukraine.

  • Crypto actually works.

  • Ukraine / . @Ukraine 6h
    Stand with the people of Ukraine. Now accepting cryptocurrency donations. Bitcoin, Ethereum and USDT.

    https://twitter.com/Ukraine/st... [twitter.com]

  • You are just looking for excuses and want to keep trading with Russia. Cut Russia off. Do it now, before all your cronies and their Russian counterparts have moved their assets. If they want to go the Bitcoin way, we know you can still trace everything, so don't shrug and tell us you can't. And btw., the blockchain is public, so if all the dark transactions end up on the blockchain, that may even be a win for transparency.

    • All you need to do is break the chain of custody to get around the open transaction record.. deposit in one wallet and release the value from another..
  • If Russia can use China for their international banking that's a big step forward for the Yuan to replace the Dollar as international currency. Why? (Note, I'm not an economics wonk, these are my opinions only)

    a) China now has Russia, Iran, and North Korea using their central bank. Plus the Western banks.

    b) I just remembered I don't research stuff for /. anymore. So, hey, take this introduction as you will.

    • Re: (Score:3)

      by Entrope ( 68843 )

      So what if China has the Axis of Oppression using their central bank? Let's compare their GDPs to US states or other countries.

      Russia normally has a slightly smaller GDP than New York State (which in turn is smaller than Texas, and California is almost the size of those two combined). Iran's GDP is almost the size of Utah, Oklahoma or Iowa (pick your favorite of the three). And North Korea's GDP is unclear, but estimated at about half the size of Wyoming's -- or, looking at corporations because no state

    • Re: (Score:2)

      by slazzy ( 864185 )
      Yup, if the west actually wanted to punish Russia, we'd have to tell China to choose between Russia or Europe/USA and be prepared for them to choose Russia and cut of all commerce with China.
  • So Russia gonna just trade with degenerates in China, Iran, and North Korea? Sounds brilliant. Sell some wheat and oil, buy exactly what?
    • I can't imagine there's much that China doesn't produce. Superhero movies maybe.
      • Ask Iran and N Korea how they doing with their sole trade partner with China is doing .... off shore production != governance of head companies in the west. Yeah you can do some weird under the table trade now and then, no economy can run like that.
      • Comment removed based on user account deletion

  • As soon as CBDCs are widely adopted, most governments, including and especially the US, will consider the possession of cryptocurrency to be evidence of criminality. Which is just desserts for everyone that currently has it, honestly, but that's going to be a very bad decision in the long run.

  • If Russia try to bully regular banks from not supporting ukraine, bitcoin will help em bypass it

  • Man the establishment really hates bitcoin don't they?

    • Do I represent the establishment? I dunno - I’m not an anarchist, not a libertarian, I believe in the rule of law, but also understand sometime the law can be a tool for oppression. On the other hand, I dont get to sit in the secret meetings with all the shadowy power brokers that certainly make up what you think is “the establishment”.

      With that out of the way, speaking for the “establishment” which I can only dubiously claim to speak for, we don’t hate bitcoin, but

      • Re: (Score:3)

        by Thaelon ( 250687 )

        The sole criterion for a currency is that people accept it in trade.

        I can buy BTC at my local liquor store. One of Portland's most famous strip clubs accepts BTC. I've used it to buy drugs online.

        It's a currency because people accept it for goods and services. Treating it like an investment is the foolish part.

        • Like the parallel comment says, it's used for bartering. If it were a currency, the prices should be fixed amounts of bitcoin. I've not seen that anywhere. So no, it fails one of the main requirements to be considered a currency. GP comment is right, there's a lot of false marketing around crypto coins.

          • No, this is nonsense. I frankly don't know if bitcoin is a currency or not but if not it's not because the value goes up and down. Up and down relative to what? Because currencies go up and down relative to one another all the time, so that literally cannot be the differentiating factor. It's a factor in whether it makes sense to use it, but it's not a factor in whether it is a currency.

            The major definitions of currency are "a system of money in general use in a particular country." or "the fact or quality

            • My point above wasn't that bitcoin goes up and down, my point was that no price indications are in fixed bitcoin amounts anywhere. I've never seen a currency where that is the case. So no, it's not nonsense if you read what I wrote.

              • my point was that no price indications are in fixed bitcoin amounts anywhere. I've never seen a currency where that is the case

                during hyperinflation it's normal for prices to change frequently. and bitcoin's value changes enough that it's understandable. I just don't think that's what determines what's a currency. I think what makes it a currency is that you can spend it. There are actually places that take it directly so it's a currency, if not a universally accepted one. Right now a lot of places aren't taking Rubles for one reason or another :) so is it a currency? Yep, just one rapidly losing value. Will it gain it back? Dunno,

                • I still don't think it's a currency, not even a crappy one, because even in cases with hyperinflation the prices are still marked in the hyperinflation currency. Like I stated, no place indicates prices solely in bitcoin, some just decided they will accept bitcoin but based on actual conversion prices. That's not a property of any currency.

              • Re: (Score:2)

                by Thaelon ( 250687 )

                >, my point was that no price indications are in fixed bitcoin amounts anywhere

                So? Nobody had ever used paper (technically cotton) for a currency until they did and that also didn't matter.

                People accept it for goods and services, and spend it on goods and services. That makes it a currency. Everything else is irrelevant.

                • That's your opinion on what characteristics a currency has. Doesn't make it fact though.

                • Re: (Score:2)

                  by jeremyp ( 130771 )

                  Nobody uses paper as a currency. Paper currencies are not the paper they are sometimes printed on. Saying that the important thing about the dollar is paper is like saying the important thing about Bitcoin is electrons.

      • Most accurately, itâ(TM)s an extremely hyper-speculative asset (unlike the $) with no underlying physical value (just like the $) and what ever value it has is entirely unenforceable by any large group of people

        You just described every fiat currency that has ever existed. Including the dollar. And no, a large group can't "enforce" the value of a fiat currency. They're all, by definition, only worth whatever you think they're worth. Every time governments have tried to "enforce" the value of any fiat currency, it doesn't really work. For example, Venezuela sets an official exchange rate for the Bolivar, but nobody will actually pay that for it, so instead they have to exchange it illegally. Governments can manipula

  • The usurers are no longer all-powerful? Not to worry, I'm sure they'll pay some politicians to try fixing that.
  • For speeding up the regulation of online 'currencies'. Ideally mining will be banned as well.
  • Almost all bitcoin that has moved between different people in the last few years is on exchanges. Bitcoin is essentially centralized now. There was a time when this wasn't true. Mt. Gox was for buying and selling Magic the Gathering trading cards, transaction fees used to be low enough that you could trade with your friends. I don't know anyone who has held bitcoin in their own wallet and sends it to others directly recently.

    Bitcoin would be terrible for trying to avoid sanctions. Russia mostly sells
    • You're nuts. I don't know what the percent of volume that goes through exchanges is but the vast majority of btc is not held on exchanges
      • The vast majority that MOVES is held on exchanges. A lot is held in wallets that hasn't move a single time in years. The trading on exchanges is over 99% of the trading. And the derivative trading dwarfs the regular trading. Actual trades on the block chain are limited to about 25000 per hour. Binance alone might have that many trades in a minute. https://coinmarketcap.com/rank... [coinmarketcap.com]
        • Now look at defi platforms, there are individual platforms that hit those numbers, and there are a lot of them.
  • Everyone focused on "it takes so long to confirm a transaction" or "transactions are expensive" is missing the point. We're talking about moving huge amounts of money, possibly billions, from central banks to countries and nation states. It already takes hours to confirm a wire, or days to do an electronic transfer. Waiting a few hours for a Bitcoin transaction to confirm is nothing new if the alternative was to wait a day for a wire transfer.

    But I wonder if this isn't even more destabilizing for Russia. I

    • I'm not sure that is really the problem you make it out to be though; the central bank can broker the Bitcoin transactions and issue crypto-backed Ruble. Ironically it might be more stable. It does create several other issues though, like loss of control of the central bank.

      • Re: (Score:2)

        by ffejie ( 779512 )
        Yeah, I am admittedly still learning about this, and trying to figure out all the puts and takes. (I think most in the media are too. Not sure anyone has a clear picture.)

        I guess if you're Russia, you just figure the Ruble can't be used outside of Russia (who would bother?) and the exchange rate fluctuates as Russia dictates vs. BTC. This, in turn, lets us understand the conversation of Dollars --> BTC --> Ruble, but inside Russia, who cares? If every price is set in Rubles, the global fluctuations o

  • Most people know Russia exports a lot of oil, but how many also know that Russia is one of the major exporter of food, such as wheat? And guess what, another major exporter of wheat is, surprise, Ukraine.

    So now you have US and friends sanctioning Russia, the major exporter of oil and grains, and a war going on in Ukraine. Is the US prepared for a wave of inflation coming from increased oil price AND food prices?

    Then, did Americans forget that Russia share a land border (hence US cannot blockade) with a ma

    • What did Europe get out of this? High energy prices, high food prices, and then another wave of refugees.

      EU is net exporter of wheat: 17.6 million tonnes exported in the past 34 weeks, compared to 0.675 million tonne wheat imports from Russia+Ukraine (source EU customs dashboard https://ec.europa.eu/info/food... [europa.eu] ). Rye and Sorghum are sourced from Russia+Ukraine, but the amounts imported are small anyway.

      Regarding refugees, the situation should be better than the previous middle-east wave: Ukrainians will use family networks which already existed in several European countries; cultural proximity guarantees goo

      • So what if the EU is a net exporter? You don't understand like the commodity markets work, similar to the Americans who say the same thing about oil. If the world price for a commodity goes up, thr price in the exporting nation also goes up because exports will grow and less stays left for internal consumption. Moreover, in case of wheat, some piss poor African nations depend on wheat imports and if they won't be able to afford it you can bet your arse off we get more refugees from there.
        The whole situation

        • This unlike oil because Russia/Ukraine will not reduce their total production like OPEC does, they will produce the same and maybe sell to China instead of EU. Large prices increases in 2010 and 2012 happened due to low crops in Russia, but previous armed conflict (Crimea/Donbass since 2014) where sanctions were implemented and the exchanges EU/Russia were affected for some months, the market price of wheat did not change.

          • And just keep selling to the US. Biden said he wants to continue buying 800,000 barrels of oil a day from Russia and make sure now oil transactions are blocked in SWIFT.

          • Except they won't. Both countries will struggle to afford fertiliser, seeds and tractors, a lot of Ukrainian harvest will be destroyed by warfare and there also will be loss of manpower.

    • Most people know Russia exports a lot of oil, but how many also know that Russia is one of the major exporter of food, such as wheat? And guess what, another major exporter of wheat is, surprise, Ukraine.
      [...] Is the US prepared for a wave of inflation coming from increased oil price AND food prices?

      Most people know the USA exports a lot of military hardware, but how many people also know that the USA is the world's largest exporter of food... including wheat? And guess what, "The United States exported some 27.22 million metric tons of wheat in 2018/2019, and imported about 3.81 million metric tons of wheat in that time period." So yeah, because wheat is a commodity the prices are going to rise, but it's not going to be because there's going to be a shortage in the USA. We literally do not need any wh

      • Re: (Score:2)

        by nasch ( 598556 )

        Also, right now fuel prices are high specifically because oil companies are price gouging during a pandemic, which is supposed to be illegal.

        Supposed to be according to what?

    • Re: (Score:2)

      by Tom ( 822 )

      What did Europe get out of this? High energy prices, high food prices, and then another wave of refugees.

      You forgot crippling impact on several sectors of the economy (the sanctions hit Europe harder than Russia, already have before) and a higher dependency on the USA.

      In other words: win-win - from a US perspective. Russia down, Europe down. I'm curious to see what the plan for putting China down is.

  • Haven't russia taken a hard line against bitcoin in the past, and even proposed making it outright illegal with severe punishments for anyone using it?

  • CNN: 'Financial Sanctions are Easier Than Ever for Russians to Evade. Thank Bitcoin'

    That's why Mr. Biden suggested that everybody send lots of MANPADs and ATGMs to the Ukraine. They are hard to evade, work real quickly and convert uncle Vlad's jet fighters, gunships and tanks into scrap metal with a bright flash and a loud BOOM!.

  • You can't buy Government / Nation scale amounts of BTC with Rubles.

    Maybe $ 1-2 billion max I would guess.

    Even those will be basically from Russian citizens/ companies /banks who will accept your Rubles for local use. The exchange of rubles to usd will be completely screwed up from post sanctions at least for large amounts.

    And if you already have few trillion USD in your central bank or Ru banks then you can anyway bypass all these sanctions.

    Also, BTC/ETH/etc are mainly designed in a way where all txns are r

  • The US and allies won't target the Bitcoin infrastructure

  • Sometimes I wish news were forced to report without hiding simple truths behind convoluted language:

    The West's initial salvo of financial sanctions against Russia failed to deter President Vladimir Putin from launching a full-scale invasion of Ukraine. Now the United States is taking a punitive approach, announcing another round of sanctions meant to tighten the screws on Russian banks and "corrupt billionaires."

    In other words:

    We did A. It didn't work. So let's do more of A.

    In our pen & paper roleplaying rounds we have a saying: "What helps if violence doesn't help? More violence!" - but it's supposed to be a joke!.

  • The Kleptocrats wealth would still need to be converted from cash, bonds, shares etc into bitcoins and any transactions are frozen.

  • Shocked, I say.

    How could a financial system designed to be anonymous and untraceable ever be used by criminals and terrorists?

    Don't they know they are being naughty and oughtn't to do that?

    Tsk tsk. For shame!

    There, now that they've been publicly humiliated, I'm sure they'll have learned their lesson and come clean.

  • the resident slashdotters said Bitcoin completely useless.

    Ukraine is using it now.. Its legal over there!! Millions pouring in.

    Russia might use it to sell its gas.

    Slashdot still saying Bitcoin is useless ?

  • They already outlawed it. If they decide to use bitcoin you can bet the rest of the world will kill bitcoin and anyone holding it will lose it all. The Government won't care that they screw you on your highly speculative investment.

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