Reuters reports “exclusively” how fleeing Russians billionaires exchange billions worth of Bitcoins in Dubai. It is most likely not true.
According to Reuters , crypto companies in the UAE are being inundated with requests to “liquidate billions of dollars in virtual currencies while Russians Oligarchs seek a safe haven for their assets,” crypto scene sources and executives said -Company.
Some of the companies’ customers used cryptocurrencies to buy property in the Emirates, while others wanted to exchange their virtual money for real money. Reuters reports that a company has allegedly received numerous inquiries over the past ten days from Swiss brokers whose Russian clients are currently concerned that Switzerland will freeze their assets. A manager said that none of the inquiries were for less than two billion dollars. So far, however, no deal has been concluded.
The broker says, “We have one guy – I don’t know who he is, but he came through a broker – and they’re like, ‘we want to sell 125,000 bitcoin’. And I’m like, ‘what? That’s $6 billion guys’. And they’re like, ‘yeah, we’re going to send it to a company in Australia’,”
Sanctions also apply to crypto assets
Reuters then asked around in Switzerland what was going on with the sanctioned cryptocurrencies.
While the Economy Ministry did not provide any information on actual sanctions for crypto wallets, it confirmed that they are subject to the same sanctions that apply to other Russian assets. Meanwhile, sources in Dubai confirmed that scores of Russians and Belarusians are moving to the Emirates, “bringing what they can, including in crypto,” and using cryptocurrencies to buy property there.
At the same time, the major stock exchanges, such as Coinbase or Binance, have begun to restrict Russian trading to a greater or lesser extent and to freeze their coins more or less extensively. Most major exchanges stress that they will prevent Russians from using cryptocurrencies to undermine war sanctions.
The prospect of this happening apparently alarms Western politicians. Reuters notes that countries like Germany or Estonia are looking for ways to close such loopholes, while diplomats, while trying to persuade the Emirates to join the sanctions, have little hope of success. The FATF gray listed the Emirates in early March, putting the country and its vulnerabilities to money laundering under close scrutiny.
Overall, the story of the Russians dumping billions worth of cryptocurrencies sounds plausible, right?
Admittedly, there are a few gaps.
Transactions that make little sense
First, did the Russians buy all these bitcoins after the war broke out?
It must have been a lot of coins. Many many. Brokers are reporting many inquiries – more than ever before – involving amounts of ANY MORE than two billion dollars. Even assuming Reuters knows about all attempts, and even assuming that all Russians who fled to crypto wanted to cash out in the same window – both rather unlikely – even then the process would be unrealistic: First, there aren’t that many bitcoins on the markets, and even if it were, such an acquisition would raise prices tremendously. Impossible that such a massive shopping spree went unnoticed.
So the Russians must have had these bitcoins before. That, in turn, is quite possible, as the Kremlin estimates that Russians hold or have held around $200 billion worth of cryptocurrencies. The fact that many are now using them to leave the country and set up a livelihood elsewhere is extremely likely and shows the role Bitcoin plays in contemporary conflicts and refugee movements. It will never be the same again. People fleeing violence and war and autocrats never have to leave all of their wealth at home ever again.
But it is much less likely that Russians will suddenly sell ALL the bitcoins they have accumulated over the years in one fell swoop. A sale of 125,000 bitcoins, even off the floor, would knock prices down. Furthermore, a sum of six billion dollars could not easily be put into real estate without significantly increasing their prices. So it would be a huge loss-making business that apparently happens without need: Who needs six billion dollars IMMEDIATELY or real estate of this value?
And above all: Who wants to change the bitcoins into fiat money to send them to Australia, which is subject to the sanctions – because they want to avoid sanctions?
If anything, all of this only makes sense when absolute necessity leaves no other option: when the corresponding Russian billionaires have reason to panic. When even the worst deal is the best option. Reuters closes this gap by stating that the Russians are making sure that their cryptocurrencies are frozen in Switzerland.
At the latest at this point, a reader should become attentive. Are the Russians holding cryptocurrencies worth billions in Swiss stock exchange accounts? And they are able to send them to brokers in the Emirates – but not to a confiscation-proof dedicated wallet?
No asset is as safe from confiscation as a cryptocurrency. If a Russian oligarch can own cash or real estate in Dubai, then he can also hold and trade bitcoins.
This makes the story a little less plausible. It’s already bordering on the unbelievable. But another observation gave her the deathblow.
A long known scam
“Ok,” someone wrote on Twitter, “these 100k plus BTC ‘deals’ people are talking about these days are scams.
They are escrow scams where they try to trick you into handing over collateral for a trade to a trustee with whom they are in cahoots. These scams have always been there and currently they just disguise themselves as Russians to look more real.”
Ok these 100K plus BTC “deals” people are talking about they are scams, they are escrow scams where they try and get you to post some collateral for the trade with an escrow who is in on it, they have always been around they are just being skinned as russia related to seem real
— CantMakeSense (@cmsholdings) March 11, 2022
Another confirms: “This makes no sense – why liquidate bitcoin to fiat to send to Australia – this sounds like a scam. I remember those crazy OTC requests from spring 2018.”
OTC means “over the counter” and refers to over-the-counter trading.
This does not make any sense – why liquidate #bitcoin to fiat to transfer it to Australia afterwards – this sounds like scam attempt. I remember the same crazy OTC requests from early 2018. https://t.co/mpXLOkpuv4
— This is Alpha (@alpha_authority) March 11, 2022
Someone else says they’ve been hearing stories like this from Dubai for four years now.
“We have one guy – I don’t know who he is, but he came through a broker – and they’re like, ‘we want to sell 125,000 bitcoin’. And I’m like, ‘what? That’s $6 billion guys’. And they’re like, ‘yeah, we’re going to send it to a company in Australia’,”
— db (@tier10k) March 11, 2022
And Kraken’s Jesse Powell confirms: He’s seen such attempts so many times over the years. Not one was legitimate, not one had proven to have access to a wallet with that many coins.
? Seen so many of these over the years. Never one legit. No proof of control of such a wallet ever provided. Always a scam or someone trying to spook the market. They don’t even make sense. What are you going to do with $4b cash? https://t.co/K2fd8HaAm0
— Jesse Powell (@jespow) March 11, 2022
And so forth. So it seems pretty obvious that Reuters – and the brokers involved – fell for a duck here. Now it is also understandable why none of the deals came about: the coins were never there and the brokers were not willing to accept the conditions of the alleged sellers.
Bitcoins still play a major role
In order not to misunderstand the whole thing: There are almost certainly Russians who own a lot of bitcoins. Many of these Russians have almost certainly fled the country with these bitcoins, and many will sell them, and yes: they will exchange them for fiat money for real estate exchanges, and maybe send them to companies in Australia as well.
The influence of Russian bitcoins should not be underestimated. The fortunes that Russians are currently saving from sanctions, inflation and economic collapse through cryptocurrencies can play an enormous and meaningful role in the near and medium future of Russian history. As we have already described, it can massively accelerate hyperbitcoinization in Russia and lead to the Russian economy being sold out to bitcoin barons.
However, the fact that hundreds of thousands of Russian Bitcoins hit brokers in the Emirates and Switzerland in one fell swoop is extremely implausible.