Russian Supreme Court Bitcoin-to-fiat trades by criminals are money laundering.
Russia’s Supreme Court has ruled that criminals’ Bitcoin-to-fiat trades can be considered money laundering.
According to a report from the Russian legal affairs-focused media outlet RAPSI, the Supreme Court made this judgement in a case involving a citizen who sold narcotics to drug users who paid with cryptocurrency.
The court learned that the man produced and sold the banned stimulant mephedrone and “received money from buyers in Bitcoin,” which he then converted into fiat rubles.
He then proceeded to transfer this fiat to accounts and cards belonging to his live-in lover’s daughter.
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A lower court initially found him guilty of drug trafficking but acquitted him on charges of money laundering.
At the time, the court ruled that financial transactions with fiat converted from Bitcoin could not be considered “laundered” unless they were “introduced into economic circulation.”
The man earned around $100,000 worth of fiat rubles from his drug deals.
Prosecutors were dissatisfied with this initial ruling and took the case to the High Court.
However, the High Court upheld the original verdict, prompting the prosecution to take the case to the Supreme Court, the highest court in the nation.
However, the Supreme Court took a very different position on the matter.
It interpreted the relevant section of the Criminal Code, which pertains to the “laundering of funds obtained by criminal means,” to include all financial transactions involving the proceeds of crime.
The court stated that even if the convict did not actually use the funds, the fact that he transferred the fiat to another person’s bank accounts indicated that the cash was already de facto in “economic circulation.”
Prosecutors presented evidence of the drug dealer using “technological tools” to hide the source of the money he deposited into his lover’s daughter’s accounts.
‘Criminals’ Bitcoin Sales Are Money Laundering:’ What the Russian Court’s Decision Means
The Supreme Court ruled that the criminal code could be interpreted to mean that “funds converted from virtual assets” could be considered laundered if they were “acquired as a result of a crime.”
The court referred to precedent from a 2019 ruling in which a Supreme Court judge held that the “purchase of cryptocurrency for criminal proceeds” could be considered a form of money laundering.
Courts and prosecutors are likely to use this ruling as legal precedent.
This is likely to make it easier to seize and liquidate tokens in future crypto-related cases.
It will also mean that courts can impose much harsher sentences in criminal cases involving cryptocurrency.
Earlier this month, the Russian secret service arrested a citizen on treason charges for allegedly sending a crypto donation to the Ukrainian armed forces.