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Economy

Russian Oligarchs Turn To Crypto To Skirt Sanctions

Faced with a $32 billion drop in their wealth this year, Russian oligarchs are looking for assets to allow them to overcome sanctions that will increase with the invasion of Ukraine. Familiar with crises, they see bitcoin and other cryptocurrencies as an escape from the hegemony of the dollar, and a way to diversify their holdings.

Vivid's app is seen on a display of an iPhone while the candlestick chart of a cryptocurrency is shown on a monitor in the background

Holding crypto allows oligarchs to escape seizures of their assets abroad

Nessim Aït-Kacimi

With the European Union and the United States delivering the harshest ever sanctions on Russia following the invasion of Ukraine, ultra-wealthy Russians are turning to new tech to preserve their financial assets. Cryptocurrencies, such as bitcoin (circa $32,000) and ethereum (circa $2,470) can be seen, rightly or wrongly, as life savers during financial and geopolitical crises that threaten private assets.


For those close to the Russian power personally targeted by Western sanctions, holding crypto allows them to escape seizures of their assets abroad. And holders have taken care to cover their tracks, as bitcoin is traceable and transparent. Concerned about discretion, Russian investors may prefer cryptos such as monero ($154) that offer anonymity to their users.

Bitcoin boom in Moscow

The U.S. authorities recently demonstrated during the arrest of the couple suspected of laundering the Bitfinex hack that they were gaining momentum in tracking the flow of these new assets. The U.S. Treasury noted in a statement Tuesday that oligarchs under sanctions have used family members to transfer their assets and hide their vast wealth.

The 23 certified Russian billionaires still hold assets estimated at $343 billion.

Earlier this month, the Russian government estimated that its citizens held $214 billion worth of crypto, or around 12% of the global total. Among these holders are the mighty fortunes of Russian oligarchs. Their diversified wealth (stocks, real estate) has decreased by $32 billion this year according to the billionaires indices compiled by Bloomberg.

Although cryptocurrencies has fallen by 8.5%, it has held up much better than the Moscow Stock Exchange, which has dropped by 23% in 2022. The 23 certified Russian billionaires still hold assets estimated at $343 billion. However, when placed abroad, this money is in the crosshairs of the American authorities.

​New monetary order

Oleg Deripaska

Oleg Deripaska, founder of Basic Element, one of Russia's largest industrial groups.

wikipedia/AntonPopper777


Just take Oleg Deripaska, the founder of Basic Element, one of Russia's largest industrial groups. Deripaska has been targeted for two years by U.S. sanctions, and last October, he called on the Bank of Russia to embrace cryptocurrencies. Disgruntled, he reacted on the Telegram messaging platform while the Federal Bureau of Investigation conducted raids on his properties in New York and Washington.

Deripaska hoped the global success of cryptos could divert investors from the dollar. He even imagined it would lead the United States to default for a lack of buyers for its debt, resulting in a crash of American currency. On a political level, this would significantly hinder the U.S.’s ability to impose sanctions, which hinges on the dollar being the world’s reserve currency.

Iran and North Korea have both used cryptocurrencies to circumvent Western sanctions; a United Nations report even found that North Korea is funding its nuclear program with cryptocurrency stolen with ransomware.

Already, the Russian government is creating its own central bank electronic currency, a digital ruble, to trade directly with other countries without converting to dollars (China, Russia’s largest trading partner, has also developed its own central bank digital currency.)

A crypto culture

But Russia has only partially met the expectations of its oligarchs. It has not allowed cryptos as a means of payment, according to a bill from the Minister of Finance that was presented earlier this week. Individuals will be able to invest a maximum of $7,700 a year in bitcoin if they pass a test to assess their knowledge of this cryptocurrency. If they fail, they will be able to invest only $650 in the world market leader.

This restrictive approach, which displeases the Russian crypto sector, is likely to be sidestepped, and not just by oligarchs. A broader spectrum of the Russian population is getting interested in these digital assets.

In 2021, the country was ranked 18th out of 154 for its level of cryptocurrency adoption, with individual users, companies and transaction platforms. And in 2020, Russians earned $600 million from their investments in bitcoin, as much as the French, but far behind the Americans ($4.1 billion), according to the annual ranking of Chainalysis.

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Coronavirus

Chinese Students' "Absurd" Protest Against COVID Rules: Public Crawling

While street demonstrations have spread in China to protest the strict Zero-COVID regulations, some Chinese university students have taken up public acts of crawling to show what extended harsh lockdowns are doing to their mental state.

​Screenshot of a video showing Chinese students crawling on a soccer pitch

Screenshot of a video showing Chinese students crawling

Shuyue Chen

Since last Friday, the world has watched a wave of street protests have taken place across China as frustration against extended lockdowns reached a boiling point. But even before protesters took to the streets, Chinese university students had begun a public demonstration that challenges and shames the state's zero-COVID rules in a different way: public displays of crawling, as a kind of absurdist expression of their repressed anger under three years of strict pandemic control.

Xin’s heart was beating fast as her knees reached the ground. It was her first time joining the strange scene at the university sports field, so she put on her hat and face mask to cover her identity.

Kneeling down, with her forearms supporting her body from the ground, Xin started crawling with three other girls as a group, within a larger demonstration of other small groups. As they crawled on, she felt the sense of fear and embarrassment start to disappear. It was replaced by a liberating sense of joy, which had been absent in her life as a university student in lockdown for so long.

Yes, crawling in public has become a popular activity among Chinese university students recently. There have been posters and videos of "volunteer crawling" across universities in China. At first, it was for the sake of "fun." Xin, like many who participated, thought it was a "cult-like ritual" in the beginning, but she changed her mind. "You don't care about anything when crawling, not thinking about the reason why, what the consequences are. You just enjoy it."

The reality out there for Chinese university students has been grim. For Xin, her university started daily COVID-19 testing in November, and deliveries, including food, are banned. Apart from the school gate, all exits have been padlock sealed.

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