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New Sanctions, US Now Targets Russia's Crypto Mining

Navigasi - The United States (US) government added Russian crypto mining company Bitriver to its sanctions list on Wednesday, April 20, 2022 local time as part of its ongoing efforts to block Russian companies from accessing global financial networks following Russia's invasion of Ukraine.
 
New Sanctions, US Now Targets Russia's Crypto Mining
New Sanctions, US Now Targets Russia's Crypto Mining


The US Treasury's Office of Foreign Assets Control (OFAC), which handles the US sanctions list, added Bitriver and 10 subsidiaries, and said the companies were "operating in the technology sector" of the Russian economy.

"Treasuries are also taking action against companies in Russia's virtual currency mining industry. By operating large servers that sell virtual currency mining capacity internationally, these companies are helping Russia monetize its natural resources," the US Treasury said in the announcement, quoted from CoinDesk, Friday (22/4/2022).

"Russia has a comparative advantage in crypto mining due to its energy resources and cold climate. However, mining companies rely on imported computer equipment and fiat payments, which makes them vulnerable to sanctions," the announcement continued.

Unlike some crypto-related sanctions, OFAC does not list Bitcoin or other crypto wallet addresses associated with sanctioned companies.

The US has sanctioned various Russian oligarchs and key businesses after Russia invaded Ukraine in late February, in the hope that the financial penalties could convince Russian President Vladimir Putin to withdraw his troops. Several Russian banks have also been blocked from the international SWIFT bank connection network.

Earlier, the Chairman of the Securities and Exchange Commission (SEC) Gary Gensler said on Monday local time, it will carry out greater regulatory oversight of the cryptocurrency market which is currently valued at USD 2 trillion or around Rp. 28.6 quadrillion to protect investors from fraud attacks.

In a speech delivered virtually, Gensler said the SEC plans to register and regulate crypto platforms, including work to segregate asset stores to minimize risk.

“This crypto platform plays a similar role to a traditionally regulated exchange. So investors should be protected in the same way," Gensler said, quoted by CNBC, Friday, April 22, 2022.

Gensler provided details on his plans to tackle the crypto market nearly a month after President Joe Biden signed an executive order asking the government to examine the risks and benefits of cryptocurrencies.

Last year, more than USD 14 billion worth of crypto assets were stolen through a number of scams and cyberattacks.

The SEC, Gensler said, will partner with the Commodity Futures Trading Commission to address platforms that trade crypto-based security tokens and commodity tokens, as the SEC currently only oversees those who trade securities.

He said the SEC would look into whether crypto platforms should be treated by his agency more like a retail exchange. Gensler also discussed what the SEC can do in the area of stablecoins and crypto tokens.

Stablecoins are digital currencies that are designed to be less volatile than cryptocurrencies by pegging their market value to outside assets such as the US dollar. “Stablecoins are also frequently owned by crypto platforms, creating potential conflicts of interest and questions of market integrity that would benefit from more scrutiny,” concluded Gensler.

Previously, a hacking group linked to the North Korean government, Lazarus Group, has stolen $1.75 billion worth of cryptocurrencies in recent years.

The data is according to a company that tracks digital currency transactions, Chainalysis. The hacker group also recently became the mastermind behind the world's second largest crypto theft experienced by the USD 620 million game Axie Infinity, or around Rp. 8.9 trillion.

The FBI said it blamed hackers linked to the North Korean government for stealing more than $600 million in cryptocurrency last month from a video game company, the latest in a string of daring cyber heists linked to Pyongyang.

"Through our investigation, we can confirm Lazarus Group and APT38, a cyber actor linked to the DPRK, were responsible for the reported theft of USD 620 million in Ethereum on March 29," the FBI said in a report quoted by CNN, Friday, April 22, 2022.

DPRK stands for North Korea's official name, the Democratic People's Republic of Korea. The FBI is referring to the recent computer network hack experienced by Axie Infinity, a video game that allows players to earn cryptocurrency.

Sky Mavis, the company that created Axie Infinity, announced on March 29 that unknown hackers had stolen approximately USD 600 million from a "bridge" or network that allows users to send cryptocurrency from one blockchain to another.

The US Treasury Department sanctioned the Lazarus Group, a large group of hackers believed to be working on behalf of the North Korean government. The Treasury Department approved certain "wallet" or cryptocurrency addresses, which were used to cash in on the Axie Infinity hack.

Cyberattacks have been an important source of revenue for the North Korean regime for years as its leader, Kim Jong Un, continues to pursue nuclear weapons, according to a UN panel and outside cybersecurity experts.

North Korea last month fired what is believed to be its first intercontinental ballistic missile in more than four years.

Researchers at Google last month disclosed two different alleged North Korean hacking campaigns targeting US media and IT organizations, as well as the cryptocurrency and financial technology sectors.

Google has a policy of notifying users who are targeted by state-sponsored hackers.

Google Analytics Group leader Shane Huntley said if Google users have "any link to get involved in Bitcoin or cryptocurrencies" and they get a warning about a state-backed hack from Google, it almost always ends up in North Korean activity.

"This appears to be a sustainable strategy for them to complement and make money through these activities," concluded Huntley.