Cryptocurrency Witch Hunt: New Mining Center Uncovered in Ukraine

Published on 02 Feb. 2018
Mining farm

It seems like Ukrainian law enforcement bodies have found a new way to always be on a roll. They heroically expose the regular crimes of the darned cryptocurrency miners. Since Ukrainian legislation gives no direct answers about the regulation of this sphere, mining is not forbidden. And if the electricity payments are covered, it’s hard to qualify the activity as some crime. So the law enforcement bodies have to improvise. They’ve reached considerable success in this sphere, and “financing of the Donbas guerillas” becomes an infallible argument. Similar accusations were voiced on the address of miners who had organized their farms on the territory of the enterprise “Kvazar” in Kyiv.

Earlier, SSU provided the same arguments when it was searching the apartment of the founder of Forklog Anatolii Kaplan. They announced about the exposure of the “Russian citizen, who organized the mechanism of money legalization via the cryptocurrencies for the further transfer to the RF and the temporarily occupied territories of Donbas and annexed Crimea,” which was not consistent with the reality either. 

«Kvazar» Miners

Yesterday, February 2, the chief military prosecutor and the deputy prosecutor general Anatolii Matios stated during the briefing that the cryptocurrency had been mined on the Kyiv enterprise “Kvazar” (he didn’t specify what kind of cryptocurrency). It was used for financing terrorists from the self-titled “DPR” and “LPR.” He added that, besides Kyiv, mining farms were organized in Kyiv region and Cherkasy, informs UNIAN.   

Today, in the first half of the day, the series of searches have been finished in Kyiv, Kyiv region and Cherkasy. By results of the searches, the activity on using the equipment for cryptocurrency mining was stopped. Part of the funds, through the digital wallets Qiwi and Yandex.Money that are officially forbidden in Ukraine has been directed to the financing of the illegally armed formations “LPR” and “DPR” for purchasing military equipment, weapon and ammunition,

- says the report.

According to Matios, by the result of searches on one of the Kyiv enterprises, “police have exposed, excluded and now documentary and procedurally registers more than 400 farms for cryptocurrency mining, about thousand power supply units, thousand video cards, around 1.5 thousand hard drives, 500 motherboards, laptops, system units, documents that also confirm money transferring to the territory with the RF bank requisites.”

Witch Hunt

The founder of “Kvazar-Micro” Yevgen Utkin responded to the accusations on the involvement of his company in the incident. He stated that the so-called “farms” on cryptocurrency mining that, according to SSU information, were incriminated in financing terroristic organizations “DPR/LPR,”  had no relevance to his company or “Kvazar” factory.

Yesterday, tens of prosecutor’s officers under the police cover were looking for Bitcoins on the vast territory on 1-3 Pivnichno-Syretska str. A lot of noise… and they found a company that mined something on the rented few dozen of meters on the factory (neither factory Kvazar nor we have any relation to this group),

- wrote Yevgen Utkin on his Facebook page.

In the opinion of the head of “Kvazar-Micro,” by such actions, law enforcement agencies only accelerate the escape of the leading experts outside the country and scare off the potential investors who miraculously “ran up” to Ukraine. He added: “It’s disgusting to watch such a sign of progress. Earlier they took payoffs in the form of bottles; now they take Bitcoins.”

All the questions concerning the legal status of miners’ activity in Ukraine could be solved by the transparent legislation, similar to the one adopted in Belarus. At the beginning of this week, the head of the Department of Cyberpolice Serhii Demediuk appealed to the government to decide on the status of cryptocurrencies and regulate the questions connected to their usage on the legislative level. At the moment, cryptocurrencies and mining in Ukraine are not regulated at all, although this issue was raised several times on the highest level.

One should remind one more eloquent event that shows the absolute non-loyalty of the Ukrainian government to the cryptocurrency miners. In August last year, the National Police and SSU exposed an “illegal Bitcoin factory” on one of the objects of the Paton Institute of Electrical Welding, where 200 computers were mining cryptocurrency. Back then, police were governed by the court decision that “the release and circulation of the Bitcoin as a currency was forbidden on the territory of Ukraine.” However, there was no logic in that court decision since NBU didn’t consider Bitcoin as money.

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