Crypto Mining Company Sanctioned by Treasury
Crypto Mining Company Sanctioned by Treasury
OFAC (the US Treasury Office of Foreign Asset Control) added BitRiver, a crypto mining firm, to its list of sanctions this week. BitRiver provides hosting services for large-scale cryptocurrency mining, and is one of the largest hosts in Europe.
This is the first time that the Treasury has sanctioned a cryptocurrency mining company, and they have also added sanctions for ten of BitRiver’s subsidiaries. The move is part of the ongoing effort to block Russia from accessing the global financial system. The hope is that financial penalties will convince Putin to withdraw Russian troops from Ukraine, but BitRiver calls the sanctions unfair and anti-competitive:
“These U.S. actions should obviously be viewed as interference in the crypto mining industry, unfair competition and an attempt to change the global balance of power in favor of American companies.”
Igor Runets, BitRiver’s CEO, told Coindesk that they have “never provided services to Russian government institutions” nor worked with entities already targeted by sanctions.
Although the company was founded in Russia in 2017, in 2021 BitRiver shifted legal ownership to Switzerland and they are now headquartered in Zug. They do still have a strong presence in Russia and operate out of 3 offices there, but they also operate out of China, Japan, UAE, South Korea, Switzerland, Germany and USA.
An official statement from the US Treasury read:
“By operating vast server farms that sell virtual currency mining capacity internationally, these companies help Russia monetize its natural resources. Russia has a comparative advantage in crypto mining due to energy resources and a cold climate. However, mining companies rely on imported computer equipment and fiat payments, which makes them vulnerable to sanctions."
David Carlisle, vice president at Elliptic, told Coindesk that the sanctions were an “unprecedented action by OFAC”:
“[It is] a pre-emptive strike to prevent Russia from leveraging its energy resources for crypto-enabled sanctions evasion. … As western sanctions tighten on Russia's energy sector, Russia will be increasingly incentivized to monetize its energy resources through mining.”
He noted that there is historical precedent for this, such as when Iran was made the target of sanctions, and was able to generated up to a $1 billion by mining bitcoin:
"OFAC is clearly intent on preventing Russia from following Iran's playbook."
OFAC said that they are targeting BitRiver “for operating or having operated in the technology sector of the Russian Federation economy.” To target a Swiss-based company for having operated in Russia, just because they are part of an industry that the Russian government might choose to get involved with in the future, is a drastic move.
Is this still about Russia, or is Treasury using the opportunity to take aim at the crypto industry?
Assange Moves One Step Closer to Extradition
The United Kingdom has formally approved Julian Assange to be extradited back to the US on espionage charges. The final decision now lies in the hands of UK home secretary, Priti Patel.
According to Assange’s legal representative, QC Mark Summers, while the case is no longer open for the team to raise any new evidence, there have been “fresh developments”. What the team can do though is petition Priti Patel on US sentencing and conditions, and Summers said that in this area “serious submissions” would be made.
As well as petitioning Patel, there are other ways that Assange can continue to fight — his team can mount a challenge on some of the original issues brought up in the case which have not yet been appealed. All the while, as they continue to fight the US extradition, Assange sits imprisoned in Belmarsh maximum security prison, the UK’s “Guantanamo Bay”. He has been there for 3 years, and detained for 10.
The actual charges in the original indictment amount to the criminalization of journalism, and revolve around Assange taking measures to protect the identity of his source. The Obama administration decided they could not pursue a case against Assange, because it would put freedom of the press at risk. The Trump administration decided to go ahead with the charges, and now the Biden administration is continuing the case.
Julian faces a 175 year prison sentence if returned to US soil. It’s also worth remembering that he’s being handed over to the same people who conspired to assassinate him.
Wikileaks’ twitter page reminds supporters to “keep fighting” and to visit crowd justice to see how you can show your support.
EU Crypto Firms Join Forces
The recently passed draft for new anti-money laundering laws in the EU are prompting backlash from crypto firms across Europe. The laws include particularly burdensome and alarming stipulations:
“No minimum thresholds
Due to their speed and virtual nature, crypto-asset transactions easily circumvent existing rules based on transaction thresholds. MEPs decided therefore to remove minimum thresholds and exemptions for low-value transfers.
Public register of high-risk entities
MEPs want the European Banking Authority (EBA) to create a public register of businesses and services involved in crypto-assets that may have a high risk of money-laundering, terrorist financing and other criminal activities, including a non-exhaustive list of non-compliant providers.”
In a letter written to European Union finance ministers and lawmakers, 40 leaders pushed back against these stipulations. They argued that if minimum thresholds are eliminated it will lead, “...to the public disclosure of all transactions and digital asset wallet addresses” and “will put every digital asset owner at risk”.
Coinbase chief legal officer, Paul Grewal reacted in his blog:
“If adopted, this revision would unleash an entire surveillance regime on exchanges like Coinbase, stifle innovation, and undermine the self-hosted wallets that individuals use to securely protect their digital assets.”
The letter pleads with the EU to exclude decentralized projects from having to register as legal entities as doing so would “risk derailing years of preparatory work and the future of Web 3”. In addition, it declares that certain decentralized stablecoins should not be subject to MiCA regulation.
The draft was passed by EU lawmakers on March 31st, but the final text has yet to be approved before the law goes into effect.
Record-Breaking Hack Tied to North Korea
North Korean hackers have been tied to the Ronin Network hack last month, which now stands as the largest crypto hack in history. The attack, which was able to drain over $600 million in Ethereum and USDC deposits from the Ronin bridge contract, has been attributed to the Lazarus group, a North Korean run group of cyberhackers.
The US Office of Foreign Assets Control (OFAC) identified and added the wallet address used by the Lazarus group (which also goes by the name “Hidden Cobra”) to their official sanctions list.
Before the identity of the group responsible was discovered, it was hoped that the hack would be akin to the Poly Network hack, in which a similar amount was stolen in a flex of skills, but then promptly returned. Unfortunately, this is not the case. The Lazarus group has been using centralized exchanges to launder the crypto, including Huobi, FTX, Crypto.com, and most recently, Tornado Cash.
Tornado Cash is an Ethereum-based coin mixer. They have been working with crypto forensics company, Chainalysys, to employ an oracle contract that would automatically flag and block any sanctioned wallet address from interacting with the system. Lazarus is moving fast, and blockchain analytics firm, Elliptic, said that the criminals have already successfully moved more than $80 million worth of crypto.
WayneTech for Sale
DC is set to release 200,000 unique Batman NFTs to enthusiasts of the Caped Crusader at the end of this month.
The Bat Cowl Collection NFT release is being managed by Warner Bros. Consumer Products in partnership with Palm NFT Studio and will go for $300 apiece. Each Bat Cowl will have a unique design inspired by the many iterations, characteristics, and interpretations of the Dark Knight. Josh Hackbarth, head of NFT commercial development for Warner Bros., said at the inaugural NFTLA convention:
“We believe the Bat Cowl Collection will allow collectors to deepen their connection with Batman and the DC Universe, while embracing their fandom in the growing metaverse ecosystem”.
Additionally, DC announced plans to incorporate the various Bat Cowl designs into future stories from DC Comics. The collection is set to be released on April 26th and can be purchased on the official DC NFT site.
By Will Sandoval, NBTV Associate Producer, and Naomi Brockwell.