Russian exchanges exposed in crypto-for-cash scandal
An investigation into no questions asked transfers between Moscow and London found several Russian crypto exchanges willing to accommodate cash trades.
The investigation was conducted by the non-profit organization Transparency International (TI,) which seeks to “end the injustice of corruption by promoting transparency, accountability, and integrity.”
Releasing the ironically titled report, “FROM MOSCOW-CITY WITH CRYPTO: A Step-by-step Guide to Receiving Cash from Russia Anonymously in London,” investigators detailed their attempts to buy USDT in Russia and exchange it into cash when physically present in the U.K. capital.
“our primary goal was to understand how many of them accept cash, exchange stablecoins, and offer the possibility to sell stablecoins back for cash abroad. In particular, we looked for the possibility of getting cash in London in exchange for USDT stablecoin.”
Crypto for cash
TI stated that crypto offers Russians “a way to safely transfer their money” out of the country. This method is advantageous due to inadequate checks on the source of the crypto buyer’s income and in circumventing $10,000 cash limits placed at airports, said the non-profit.
As Bitcoin and altcoins are subject to volatility risk, TI stated that USDT, as the largest stablecoin by market share, offers “safe haven” qualities for no questions asked transfers.
“USDT is a safe haven for those who want anonymity in transferring their money abroad from Russia and do not want to take any risks related to the exchange rate fluctuations connected with BTC and altcoins.”
Investigators mentioned USDC in passing but stuck with using USDT in the investigation to keep chat operator interactions to a minimum and avoid arousing suspicions.
Despite TI’s implied suspiciousness of crypto for cash transactions, it is worth reminding that, cash is the ultimate form of private transacting, and the desire for privacy is not inherently criminal.
TI identified 21 crypto exchanges located in the Moscow City district of Russia’s capital. Further research noted that 14 of the 21 exchanges offer Over-the-Counter (OTC) services to exchange rubles in cash for USDT.
Although cash exchange services were not openly advertised, TI found 8 of the 21 exchanges were willing to facilitate the second leg of the trade by exchanging USDT for cash in London. The transactions were arranged through Telegram or the respective exchange’s website live chat. The eight exchanges were:
When the crypto exchanges were contacted for comment, Alfa.exchange, Pridechange, Trust-exchange, Mychange, and Suex did not respond.
24ExPay and Finex24 said they did not have partners or offices in the U.K., and denied having received instructions to exchange funds in London.
Bitokk responded by saying it would review the research findings but maintained that the company adheres to money laundering procedures, as recommended by the Federal Action Task Force (FATF).
To counter criminal and terrorist misuse, FATF updated its Travel Rule standards in June 2022 to recommend exchanges (or Virtual Asset Service Providers) share relevant originator and beneficiary information alongside virtual asset transactions.
TI was founded in May 1993 by former World Bank employees, including Peter Elgan, who held the position of Regional Director.