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<ul class="summary-list"><li><keyword id="11893898" type="UNKNOWN" weightage="60" keywordseo="crypto" source="Orion">Crypto</keyword> trader <keyword id="13726761" type="UNKNOWN" weightage="60" keywordseo="scott-melker" source="Orion">Scott Melker</keyword> said "now I know how it feels" after his bitcoin mining provider Compass' rigs in Russia were sanctioned.</li><li>Compass has cut ties with partner <keyword id="13726760" type="UNKNOWN" weightage="60" keywordseo="bitriver" source="Orion">BitRiver</keyword> and is scrambling to sell $30 million of equipment in Russia.</li></ul>Scott Melker, the crypto trader known as the <a href="https://www.businessinsider.com/crypto-trading-investing-tips-crypto-tokens-hodling-trader-scott-melker-2021-5?r=US&amp;IR=T">"Wolf of All Streets"</a>, said his Russian mining rigs had been sanctioned, and he knows how that feels.Compass Mining ended its business dealings and ties with Russian <keyword id="12004262" type="UNKNOWN" weightage="60" keywordseo="crypto-mining" source="Orion">crypto mining</keyword> company BitRiver after the US <a href="https://www.businessinsider.com/us-sanctions-russian-bitcoin-miner-farther-punish-putin-ukraine-war-2022-4?r=US&amp;IR=T">sanctioned Bitriver</a> and its subsidiaries last week."My mining rigs in Russia got sanctioned. Now I know how it feels," Melker <a href="https://twitter.com/scottmelker/status/1519050581423411209">tweeted</a> on Tuesday as he posted a statement from the US Office of Foreign Asset Control (OFAC) on the BitRiver sanction. Melker is an influential voice in the crypto industry and a popular investor known for his versatility in the crypto space. The sanctions on BitRiver led to Compass scrambling to deal with the fallout as it tries to sell $30 million worth of mining equipment in Russia with 12 megawatts of energy. Western countries have imposed sweeping sanctions on Russia since it invaded Ukraine, targeting the country's sources of finance. The US also <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/03/08/fact-sheet-united-states-bans-imports-of-russian-oil-liquefied-natural-gas-and-coal/">banned</a> the import of Russian oil and energy, cutting off one route for financing the war.With the sanctions on BitRiver, the US wants to cut off Russia's ability to monetize that energy in other ways and further cut funding for its war in Ukraine.The <a href="https://markets.businessinsider.com/news/currencies/russia-sanctions-crypto-bitcoin-mining-regulator-circumvent-ukraine-sanctions-imf-2022-4">IMF said</a> crypto could give Russia several ways to sidestep sanctions, including through bitcoin mining."Mining for energy-intensive <a href="https://www.businessinsider.com/what-is-blockchain?r=US&amp;IR=T&amp;utm_medium=ingest&amp;utm_source=markets">blockchains</a> like bitcoin can allow countries to monetize energy resources, some of which cannot be exported due to sanctions," it said in its <a href="https://www.imf.org/en/Publications/GFSR/Issues/2022/04/19/global-financial-stability-report-april-2022">Global Financial Stability Report</a>.The US Treasury said Russia's crypto-mining industry was the third-biggest in the world."The United States is committed to ensuring that no asset, no matter how complex, becomes a mechanism for the Putin regime to offset the impact of sanctions," the Treasury said.BitRiver founder Igor Runets decried the sanctions and said his company never provided services to the Russian government or to the targets of US sanctions."The actions of the US Treasury are therefore dictated by competitive considerations in favor of US business," he <a href="https://www.businessinsider.com/us-sanctions-russian-bitcoin-miner-farther-punish-putin-ukraine-war-2022-4?r=US&amp;IR=T">told Insider</a> last week.

“Wolf of All Streets” crypto trader Scott Melker says his Russian mining rigs got sanctioned — and now he knows how it feels

<ul class="summary-list"><li>The US Treasury has sanctioned <keyword id="11893902" type="UNKNOWN" weightage="60" keywordseo="bitcoin" source="Orion">bitcoin</keyword> miner Bitriver and its subsidiaries in <keyword id="11894337" type="UNKNOWN" weightage="60" keywordseo="russia" source="Orion">Russia</keyword>.</li><li>It says Russia's virtual currency mining industry is the third largest in the world.</li></ul>The US is adding a cryptocurrency-mining company to its list of sanctions against Russia in an attempt to block avenues of funding for its invasion of <keyword id="11985141" type="UNKNOWN" weightage="60" keywordseo="ukraine" source="Orion">Ukraine</keyword>.The US Treasury <a href="https://home.treasury.gov/news/press-releases/jy0731">said</a> Wednesday it's lobbing a fresh round of sanctions at some 40 Russian entities and individuals, including bitcoin-mining firm Bitriver and 10 of its subsidiaries in Russia.It's the first time the US is targeting a virtual currency mining company, the Treasury said.Bitriver did not immediately respond to Insider's request for comment. Founded in 2017 by Russian businessman Igor Runets, Bitriver offers up crypto mining hosting services and is currently headquartered in Zug, Switzerland. It was previously headquartered in Moscow, according to its <a href="https://bitriver.farm/en/about" target="_blank" rel="noopener noreferrer">website</a>, and has more than 200 staff across three Russian offices as well as other markets. Western countries have imposed sweeping sanctions on Russia since the start of its invasion of Ukraine, targeting the country's largest financial institutions, tech companies, Russian President Vladimir <keyword id="11909347" type="UNKNOWN" weightage="60" keywordseo="putin" source="Orion">Putin</keyword>, and many of his cronies. The US has <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/03/08/fact-sheet-united-states-bans-imports-of-russian-oil-liquefied-natural-gas-and-coal/">banned</a> the import of Russian oil and energy, cutting off one route for financing the war.With Wednesday's list, the US wants to cut off Russia's ability to monetize that energy in other ways.The Treasury described Russia's crypto-mining industry as the third-biggest in the world, a statistic that likely <a href="https://ccaf.io/cbeci/mining_map">stems from Cambridge University analysis</a>, which puts US and Kazakhstan at a larger share. China banned crypto mining in 2021.Cryptocurrency mining can "allow countries to monetize energy resources, some of which cannot be exported due to sanctions," the International Monetary Fund said in a recent <a href="https://www.imf.org/en/Publications/GFSR/Issues/2022/04/19/global-financial-stability-report-april-2022">report</a>, adding that the risk is fairly contained for now. Global monthly revenue from bitcoin mining last year was about $1.4 billion on average, with Russia accounting for about 11%, the report noted.<a href="https://www.businessinsider.com/bitcoin-mining">Cryptocurrency miners</a> operate the computing systems that underpin, for example, the bitcoin network. They go through an energy-intensive process to solve mathematical puzzles. The first to figure these puzzles out are rewarded with cryptocurrency. Farms like Bitriver host such miners at scale, buying electricity at cheaper wholesale prices.The Treasury said that Russia has an advantage in cheap energy resources and a cold climate, which makes it cheaper for companies elsewhere to mine crypto from Russia. This in turn injects foreign funds into Russia's economy."The United States is committed to ensuring that no asset, no matter how complex, becomes a mechanism for the Putin regime to offset the impact of sanctions," the Treasury said.Cryptocurrencies are thought to have supported terrorist financing or money laundering.In 2019, North Korea was <a href="https://www.reuters.com/article/us-northkorea-cyber-idUSKCN1VM18K">accused</a> by the UN of raising $2 billion, partially through raiding cryptocurrency exchanges, to fund its weapons of mass destruction programs. Its government denied the allegations. And a 2021 analysis by blockchain analytics firm Elliptic found that Iran could skirt sanctions by raising up to $1 billion annually through bitcoin mining, Reuters <a href="https://www.reuters.com/technology/iran-uses-crypto-mining-lessen-impact-sanctions-study-finds-2021-05-21/">reported</a>.Aside from Bitriver, the Treasury's latest list of sanction targets includes Transkapitalbank, a Russian privately-owned commercial bank, and companies related to Russian oligarch Konstantin Malofeyev.

The US has sanctioned crypto-mining firm Bitriver to prevent Russia from bypassing energy export bans

<ul class="summary-list"><li>Countries like Russia could use the <keyword id="2721952" type="General" weightage="60" keywordseo="crypto" source="Orion">crypto</keyword> ecosystem to sidestep sanctions in several ways, the <keyword id="6355408" type="General" weightage="60" keywordseo="imf" source="Orion">IMF</keyword> has said.</li><li>Russia could use its embargo-hit energy resources to mine bitcoin for hard cash, it suggested in a report.</li></ul>Russia could use the crypto ecosystem to get around Western sanctions in several ways, the <keyword id="6366068" type="General" weightage="60" keywordseo="international-monetary-fund" source="Orion">International Monetary Fund</keyword> has suggested — including by using its embargo-hit energy sources to mine <a href="https://wazirx.com/signup?invite=2kpah6gr&amp;utm_source=business-insider&amp;utm_medium=referral&amp;utm_campaign=article-editorial" data-type="tilCustomLink">bitcoin</a>. In its recent <a href="https://www.imf.org/en/Publications/GFSR/Issues/2022/04/19/global-financial-stability-report-april-2022">financial stability report</a>, the IMF laid out how sanctioned countries like Russia could use crypto to their benefit, and advised policymakers around the world to consider amending laws to take crypto assets into account. Russia is grappling with <a href="https://www.businessinsider.com/russian-sanction-ukraine-putin-invasion-long-term-economic-impact-g7-2022-4?r=US&amp;IR=T">crippling sanctions</a> that have cut it off from the global financial system and the dollar after it invaded Ukraine in late February, and European Central Bank chief Christine Lagarde and others have warned crypto is being used to sidestep the measures. "The war in Ukraine has brought to the forefront some of the challenges that regulators face in terms of applying sanctions and capital flow management measures," the IMF said in the report published Tuesday. "The crypto ecosystem, however, could allow users to circumvent such requirements through several means," it added. One way is to use exchanges and other crypto providers that don't comply with sanctions, or that don't scrupulously carry out due diligence. Using decentralized exchanges or technology such as privacy mixers to make transactions more anonymous is another. Countries should make sure crypto can be brought under the same capital control umbrella as traditional assets, the financial stability watchdog urged. "Laws and regulations for foreign exchange and capital flow management measures should be reviewed and amended if necessary to cover crypto assets, even if they are not classified as financial assets or foreign currency," it said. <h4><keyword id="1660859" type="General" weightage="60" keywordseo="bitcoin-mining" source="Orion">Bitcoin mining</keyword></h4>Cut off from the leading foreign currency, Russia could turn to <a href="https://www.businessinsider.com/bitcoin-mining?r=US&amp;IR=T">bitcoin mining</a> to generate hard cash from its unwanted energy exports, the IMF suggested. The US has <a href="https://www.businessinsider.com/us-sanctions-russian-bitcoin-miner-farther-punish-putin-ukraine-war-2022-4?r=US&amp;IR=T">banned</a> Russian energy imports, and pressure is building on Europe to bring in its own oil embargo. Russia is a <a href="https://markets.businessinsider.com/news/commodities/too-big-to-sanction-10-facts-russia-oil-commodity-exports-2022-3">major player</a> in the oil, gas and coal <keyword id="31671" type="General" weightage="100" keywordseo="markets" source="Orion">markets</keyword>, but many traders have shunned its energy exports in face of the measures. Over time, sanctioned countries could allocate more resources toward evading sanctions through <a href="https://markets.businessinsider.com/currencies/btc-usd">bitcoin</a> mining, the IMF said, echoing <a href="https://www.bloomberg.com/news/articles/2022-03-03/energy-rich-russia-may-turn-to-bitcoin-mining-to-dent-sanctions">warnings made by some analysts</a>. "Mining for energy-intensive <a href="https://www.businessinsider.com/what-is-blockchain?r=US&amp;IR=T">blockchains</a> like bitcoin can allow countries to monetize energy resources, some of which cannot be exported due to sanctions," it said. Proceeds from mining on the blockchain are outside the financial system, and so beyond the reach of sanctions, and that miners can also generate revenue from transaction fees, the IMF noted. But it acknowledged the small shares of mining in sanctioned countries such as Russia and Iran, when factored into the amount of mining revenue overall, mean the flows of money involved are contained. Russian miners accounted for 11% of the average $1.4 billion in revenue from bitcoin mining last year, it calculated. The US Treasury, though, described Russia's crypto-mining industry as the third-biggest in the world, as it <a href="https://www.businessinsider.com/us-sanctions-russian-bitcoin-miner-farther-punish-putin-ukraine-war-2022-4">imposed sanctions on Bitriver</a> on Thursday. It targeted the Russian virtual bitcoin miner and 10 of its subsidiaries in a bid to block avenues of funding the Ukraine war. The war underscores the difficulty regulators face in applying sanctions and measures to manage the flow of capital, according to the IMF. "Crucially, the implementation of such measures requires that intermediaries verify the identities of the transacting parties," it said. It urged policymakers to develop comprehensive global standards for crypto assets and to coordinate their regulatory approach with others around the world. It also recommended "more robust" oversight of fintechs and DeFi platforms.

Crypto could give Russia several ways to sidestep sanctions — and bitcoin mining powered by embargo-hit energy is just one, the IMF says

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“Wolf of All Streets” crypto trader Scott Melker says his Russian mining rigs got sanctioned — and now he knows how it feels

Hamza Fareed Malik

The US has sanctioned crypto-mining firm Bitriver to prevent Russia from bypassing energy export bans

Weilun Soon

Crypto could give Russia several ways to sidestep sanctions — and bitcoin mining powered by embargo-hit energy is just one, the IMF says

Hamza Fareed Malik

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