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To Save Ukraine, Freeze Crypto Too
Cryptocurrency could be a last resort of the Russian mafia state
Cryptocurrency seems cool, but let’s face it, crypto’s main purpose is to hide stuff. Sure, the blockchain-powered darling of speculators — and now even Larry David — allows for a certain degree of “freedom,” ensuring that transactions are untraceable by governments and other sorts of regulators. And sure, most of us like the idea that we can somehow do our business on our own terms, away from the prying eyes of those we deem hostile to our interests.
But at a certain point, we have to confront the fact that the main people who benefit from the invisible, seamless movement of money are criminals. “In the world of online crime,” the Financial Times wrote last year, “anonymous cryptocurrencies are the payment method of choice.” Before crypto came along, mafia accountants kept two sets of books — one for the authorities and one for their own score settling. Crypto is, in effect, that second ledger. The only difference is that now non-criminals can effectively participate in that ledger, thus in one sense making crypto investors accomplices to, um, crimes?
Now that traditional avenues of hiding money are shutting down, surprise, cryptocurrency markets are surging. During the last week, Bitcoin alone saw a 9.3% rise in value, apparently driven by Russian investment
It’s therefore no surprise that the most visible holdouts in the international effort to financially and culturally isolate Russia during the Ukraine crisis are cryptocurrency exchanges (this despite the plea of Ukraine’s Vice Prime Minister and Minister of Digital Transformation to freeze Russian accounts). The SWIFT transaction system and Swiss banks, FIFA soccer and the Metropolitan Opera, BP and Shell Oil, all have begun to cut their ties with a government that the New Yorker’s Masha Gessen has called “a mafia state.” And rightly so. As Paul Krugman recently wrote in The New York Times, “in 2015 the hidden foreign wealth of rich Russians amounted to around 85 percent of Russia’s G.D.P.” Fortunately and finally, all of that stolen wealth is at last being targeted with some degree of…
