Why The Ukranian Police Raided A Crypto Farm

Bitcoinist
Bitcoinist December 7, 2021
Updated 2021/12/07 at 4:12 AM
5 Min Read

An illegal crypto mining farm was found and shut down by authorities in Ukraine. The facility was allegedly stealing energy to conduct its operations in the Kyiv region. The authorities claimed the responsible parties were three residents of the same region who rented a large building in the Mucha district for placing the mining equipment and running operations.

The Security Service of Ukraine (SBU) reported they found an underground crypto farm in Kyiv. Allegedly, they were stealing great amounts of power, causing ‘damage’ worth over UAH 3.5 million, around $127,884.

The individuals reportedly stole the energy by meter tampering or bypassing, which means they interfered with electricity meters so they would not read or reflect the real amount of consumed electricity. They were paying “symbolically the minimum amount” for a high-level consumption.

The law enforcement officers seized 6 million hryvnias (around $219,230) worth of crypto mining hardware. They are currently looking to prosecute the culprits and investigate if there are other persons involved. Legal actions will be taken under Part 3 of Art. 190 (fraud) of the Criminal Code of Ukraine, which refers to ‘fraud’ and reads:

Fraud committed in respect of a gross amount or by unlawful operations involving computerized equipment, –

shall be punishable by imprisonment for a term of three to eight years.

The Security Service of Ukraine is evaluating the volume of damage caused through a computer-technical and economic investigation. The operation has had as collaborators the National Police investigators under the procedural guidance of the Kyiv Regional Prosecutor’s Office, involving experts from PJSC Kyiv Regional Electric Networks

Is Crypto Mining Illegal In Ukraine?

Ukraine has been working on clear regulations around cryptocurrencies activities. Last September, the Ukrainian Parliament adopted the draft Law No. 3637 “On Virtual Assets”, which introduces new policies that cover all virtual assets in the country.

‘The Draft Law’, to be signed by the President of Ukraine, sets permission for Ukrainian and non-resident companies to offer crypto-related services. The general line of the document establishes that companies that run crypto activities will have to pay 5% income tax and individuals a 10% + 1.5% military fee for virtual assets operations.

It was clearly stated that citizens are not allowed to use virtual assets as a means of payment or exchange for goods or services. The virtual asset bill is currently waiting for improvements proposed by the president.

Furthermore, there was no ban on crypto mining and the operations do not even require a license. The illegal nature of the mentioned crypto farm was only because of meter tampering, which has been the same reason for other Ukrainian raids in the year.

More Crypto Mining Raids In Russia

Many news portals have reported similar police operations happening in Russia the past few days. They have widely said that law enforcement agents discovered in Moscow a mining farm that was illegally using power from Rosseti, a Russian power-grid company and one of the largest in the world.

However, the news have quoted comments of Ekaterina Korotkova from the Moscow Interregional Transport Prosecutor’s Office, supposedly published by the Russian news agency TASS, but the quote -and therefore the reports- are unreliable since the original source is nowhere to be found.

What is safe to say is that in 2021 illegal crypto mining operations have been taken down by Russian authorities, and a crackdown by the local government on bitcoin activities has been suspected before due to other unclear reports and rumors.

In October, four bitcoin mining machines were confiscated by Russian authorities at a security checkpoint on the southern border with China. This created controversy, as some crypto blogs claimed the event meant a Russian campaign against bitcoin.

However, this didn’t seem to be the real case, since the equipment was confiscated because of the miner failing to provide the required documentation and paying fee, no bill has been passed about banning crypto mining operations.

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