Source: Anton Skripachev/Adobe
Russia’s Supreme Court has ruled that criminals’ bitcoin (BTC)-to-fiat trading can be viewed as money laundering.
According to a report by Russian media outlet RAPSI, which specializes in legal affairs, the Supreme Court ruled in a case involving a citizen who sold narcotics to drug users who paid with cryptocurrency.
The court heard the man manufactured and sold the banned stimulant mephedrone and “received money from buyers.” [Bitcoin]’, which he then converted into Fiat rubles.
He then transferred this fiat to the accounts and cards of the daughter of his lover who lived with him.
A lower court initially found him guilty of drug trafficking but acquitted him of money laundering charges.
The court ruled at the time that financial transactions involving fiat converted from bitcoin could not be considered “laundered” unless they were “put into the economic cycle.”
The man collected around $100,000 worth of fiat rubles through his drug dealings.
Prosecutors were dissatisfied with this first decision and therefore took the case to the Supreme Court.
But the Supreme Court upheld the original verdict, forcing prosecutors to take the case to the Supreme Court – the country’s highest court.
However, the Supreme Court seems to have taken a very different stance on the matter.
The relevant section of the Criminal Code relating to “laundering of criminally-obtained funds” has been interpreted as referring to all financial transactions involving the proceeds of crime.
The court stated that even if the convict did not actually use the funds, the mere fact that he transferred the fiat to someone else’s bank accounts shows that the money is in fact already in “economic circulation”.
Prosecutors presented evidence that the drug dealer used “technological devices” to disguise the origin of the money he deposited in his lover’s daughter’s accounts.
Bitcoin Prices vs. Russian Ruble Over the Last 12 Months. (Source: XE.com)
“Criminal” Bitcoin Sales Are Money Laundering: What Russian Court Decision Means
The Supreme Court ruled that the Criminal Code could be interpreted to mean that “monies converted from virtual assets” could be considered laundered if they were “acquired as a result of a criminal offence”.
The court cited precedent from a 2019 ruling in a case in which a Supreme Court judge ruled that “purchasing cryptocurrencies from crime” could be considered a form of money laundering.
Courts and prosecutors will likely use the ruling as a precedent.
And that will likely make token seizure and liquidation easier in future crypto-related cases.
This also means that courts can impose much harsher penalties in criminal cases involving cryptocurrencies.
Earlier this month, Russian intelligence arrested a citizen who allegedly sent a crypto donation to the Ukrainian armed forces on charges of treason.
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