U.S. Treasury Sanctions Russian Crypto Mining Operation Amid New Token Launch

In a press release today, the U.S. Treasury Department is taking action against companies in Russia’s virtual currency mining industry. The Office for the Control of Foreign Assets (OFAC) has appointed Bitriver AG, a Swiss-based holding company, for a cryptographic mining operation with three offices in Russia, as well as ten of its subsidiaries, for “operating or having operated in the technology sector. Economy of the Russian Federation: This historic Treasury designation marks the first time a U.S. mining operation has been sanctioned by the U.S., but the company is also in the midst of a token sale for the BitRiver (BTR) token. is scheduled to begin trading on the secondary market this Friday.

According to U.S. Treasury sanctions, BitRiver is, “… operating large server farms that sell virtual currency mining capacity internationally; These companies are helping Russia monetize its natural resources. ” imported and fiduciary payments, making them vulnerable to sanctions. The United States is committed to ensuring that no asset, however complex, becomes a mechanism for the Putin regime to offset the impact of sanctions.

I met Ari Redbord, a former senior Treasury official and a former federal prosecutor with extensive experience in sanctions and who currently serves as Head of Legal and Government Affairs at TRM Labs, a blockchain analysis firm. Redbord explained that “… the last six weeks have shown that the US and its allies are applying specific, escalating sanctions against Russia.” Redbord said: “The purpose of these sanctions is to punish, change behavior and cut off Russia from the global financial system. This means cutting off Russia from the means of production. of production to extract cryptocurrencies to evade sanctions.

Redbord further explained what this means as this is the first cryptographic mining operation designated by OFAC for sanctions violations. “The intention to target a Russian-based cryptocurrency mining company is the same as targeting a Russian gas company or financial institution: it is intended to further isolate this regime and cut Russia off from what it needs to support its economy. and evade sanctions, “Redbord said. To warn against what could be a concern in the global cryptographic mining industry, Redbord states: a flood of sanctions “.

I also spoke with William Callahan, a special agent in charge of the U.S. Drug Control Administration and director of Strategic and Government Affairs, Blockchain Intelligence Group, also a developer of blockchain analysis tools. According to Callahan, “… today’s designation also has a shot at any material supplier, noting that Russian cryptographic mining operations depend on imported computer equipment and foreign-based fiat payment systems. Financial institutions serving Companies in the cryptocurrency industry, and not just cryptocurrency exchanges, should implement enhanced due diligence on their customers who provide material goods or services to Russian entities.

Callahan also raises the idea that this will not leave Bitriver out of business or mining “… new cryptocurrencies like bitcoin, but it will make it illegal for U.S. citizens and U.S.-based stock exchanges to buy those currencies.” Callahan warns US citizens that “… Bitriver may try to sell newly minted currencies below market prices to increase liquidity; US citizens operating in a strictly peer-to-peer system should be aware that they may be violating OFAC will inadvertently buy Bitriver coins “. Although “freshly minted” coins are usually considered the safest, due to this sanction and the origin of Bitcoin from Russia means, according to Callahan, that “financial institutions, cryptocurrency exchanges and mining equipment suppliers must do additional efforts to ensure that they are not transacting with the Russian cryptocurrency ecosystem. ”

According to Jason Williams, general partner of Morgan Creek Digital Assets, who is on @goingparabolic on Twitter, he believes that this new attempt to sanction cryptocurrency mining may be counterproductive for Americans Williams said: “Stronger by leaving assets in Russia that are already hooked on renewable energy resources across the country and hashing. At a recent cryptocurrency mining conference, I spoke with several vendors who discussed the rush to move bitcoin miners out of China and neighboring countries like Kazakhstan to prevent the team from being stranded in a sovereign nation where there would be no physical access to the equipment. .

BitRiver Token Release (BTR)

As if all this new technology and potential attack vector with sanction evasion were not already sophisticated enough, another wrinkle seems to be that BitRiver is in the middle of a new token that began pre-sale on April 12 and is ready to enter operation. this Friday to negotiate. As described on the Bithumb Global cryptocurrency exchange website, BitRiver LLC was founded by Igor Runets in 2017 and is headquartered in Moscow. The company is described as offering “… hosting services and turnkey solutions for large-scale cryptocurrency mining operations to institutional investors around the world. BitRiver employs more than 100 full-time employees in three offices across Russia and full-time sales representatives in China, Japan, Central Europe, the United Arab Emirates, the United States, and South Korea. “

Bitriver will be launched as a new token for the trade associated with the US dollar stablecoin Tether. The stock exchange’s website shows options for depositing money for both the advance sale and the trading that begins this Friday. Another BitRiver website describes the new BTR token, an ERC-20 utility token based on the Ethereum blockchain that will allow holders to start mining operations at one of BitRiver’s data centers. The U.S. Treasury press office was contacted at the time of publication to comment on the sale of BTR tokens, and this article will be updated with any responses.

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