Why Russian oligarchs cannot escape sanctions through Bitcoin

Blockchain data platform Chain analysis explored and Bitcoin BTC / USD can be used to massively evade Russian sanctions in a recent blog post. Here are his findings:

Ticket size: Chainalysis was based on a 2017 study by the National Office of Economy, which estimated that Russian oligarchs have about $ 800 billion in offshore funds. The platform used the figure for its analysis but did not take into account the assets held in Russia.

See also: USDC best interest rates

Free float: Using a metric to measure the liquidity of a cryptocurrency called a free float, Chainalysis compared BTC, Ethereum ETH / USDi Attached (USDT).

Bitcoin had the lowest global supply share in the float at 14%, but its (measured in dollars) is the largest of the three currencies due to the large market capitalization of the apex currency.

Table showing digital assets, free float bid percentage, and free float bid in dollars – Courtesy Chainalysis

Still, the three assets combined have a free float of $ 296 billion. That amount is expected to move over a one-year period, but is less than half of the oligarchs’ estimated $ 800 wealth.

According to Chainalysis, the liquidation of the large amount of Russian oligarchs would put significant downward pressure on Bitcoin prices.

The models, based on an analysis of settlements and price movements in 19 exchanges, estimate that the price of Bitcoin would fall 10% after selling only $ 1.46 billion of the cryptocurrency.

Changes as obstacles: The analysis noted that most cryptocurrency transactions take place within or between platforms such as exchanges. Centralized exchanges are the only places where cryptocurrency can be turned into cash, according to Chainalysis.

Since most major cryptocurrency services are regulated and users go through your client’s knowledge procedures, it would be difficult for oligarchs to move funds discreetly.

“Remember, like all transactions in the blockchain, transfers to services are publicly visible, and extremely large movements are a topic of conversation in the cryptocurrency community,” Chainalysis said.

Cryptocurrency tickets received by the services – Courtesy Chainalysis

Given that daily revenues peaked at $ 80 billion on May 19 last year, Russian oligarchs would need 10 days of service entry at that level to move a $ 800 billion cryptocurrency. dollars so that it can be settled, according to Chainalysis.

The mixer cannot: Mixers, a service often used by criminals to overshadow their activities, cannot help oligarchs either. Mixers take cryptocurrency from multiple users and redistribute it in a random mix, with each user receiving what they have contributed.

However, if a user floods a mixer with funds, a large portion of the funds returned to him would be the original amount he paid, destroying the very purpose of the service.

According to Chainalysis, mixers receive an average of less than $ 30 million in cryptocurrency per day, but the amount rose to $ 160 million in early December.

Daily value of the cryptocurrency received by the mixers – Courtesy Chainalysis

If Russian oligarchs sent $ 160 million in cryptocurrencies a day to the mixers, it would take 5,000 days to move their total collective wealth, according to Chainalysis.

“Our results suggest that markets are not liquid enough to support the movement of hundreds of billions controlled by sanctioned Russian oligarchs,” Chainalysis concluded.

Read more: Bitcoin Miami 2022 showed an institutional change, says the analyst

Photo credit: Jernej Furman on Flickr

Leave a Comment

%d bloggers like this: