A recent incident in Russia has seen the secret service arresting a citizen for donating cryptocurrencies to support Ukraine’s army. The arrest comes amidst a surge in trading volume for a crypto trading pair during the Wagner coup.
The individual in question, Alexander Vecherko, hailing from the Khabarovsk Krai region near the Chinese border, stands accused of contributing cryptocurrencies to the Ukrainian army indirectly through a third party residing in Ukraine. The funds were intended to aid in the purchase of essential supplies such as drones, night vision goggles, ammunition, and medicine. The FSB, Russia’s secret service, considers this act a form of treason. In a video released by the secret service, the accused was shown being apprehended and provisionally convicted by the court. Currently, Vecherko is in custody in Moscow.
This is not the first instance of a resident from the region facing consequences for supporting Ukraine. Earlier this year, the FSB arrested an activist associated with the “I/We are Furgal” movement, known for protesting against allegations directed at former governor Sergei Furgal, who is seen as disloyal to Moscow. According to the FSB, the unnamed activist sent money to Ukraine out of “political hatred.” These incidents indicate a lack of patriotism towards the Kremlin in the region bordering China.
This case sheds light on the challenges faced by cryptocurrencies under extreme circumstances where financial resistance to a dictatorship is prevalent. It also underscores how measures to undermine cryptocurrency anonymity in liberal societies can inadvertently harm individuals seeking protection from monetary repression in tyrannical regimes.
The specific cryptocurrency used by Alexander Vecherko remains unknown. However, it is unlikely to have been a privacy-focused coin like Monero or a transaction conducted via the Lightning Network, as either option would have likely prevented his arrest by the FSB. Privacy was a crucial factor for his freedom in this situation.
Speculation suggests that Tether (USDT) might have been the cryptocurrency utilized. The stablecoin appears to be gaining importance in Russia, as indicated by recent trading volume data. During Yevgeny Prigozhin’s alleged coup attempt, there was a significant spike in trading volume for the ruble-to-tether trading pair on Binance. Trading volume surged from $2 million to $8.5 million but quickly plummeted once the “coup” was over.
Interestingly, no similar spike was observed in the ruble-to-bitcoin pair, suggesting that Russian citizens are turning to Tether rather than Bitcoin amid concerns of a collapse of the ruble or the Russian economy due to the coup. While data on the matter remains limited, crypto trading in Russia has become increasingly informal and underground, particularly since the unprovoked aggression against Ukraine. The repressive climate in Russia and the need for compliance with Western markets have led exchanges to remove the ruble. Sanctions are having their impact.
Despite the scarcity of available data, it is plausible that Tether has gained significance in Russia since the onset of the war. Prior to that, there were indications of Tether’s role in the gray trade between China and Russia, and subsequent reports have suggested Russians are using Tether to bypass sanctions. While the collapse of the Russian economy and hyperinflation of the ruble remain hypothetical scenarios without current evidence, Tether could temporarily serve as a substitute currency for the dollar without approval from the US central bank. This speculation could provide an explanation for the surge in trading volume observed during the “coup.”