Scare​​ Tactics ​​and​​ Unlawful​​ Seizure: ​​Ukraine’s Security Service Cracks ​​Down ​​on Popular ​​Crypto ​​Media

News and Analysis
18.12.2017

At 8 a.m., December 15, agents of Ukraine’s Security Service (SSU) along with two civilian witnesses to the search entered Anatoly Kaplan’s, founder and CEO of ForkLog online magazine, rented apartment in Odessa and conducted a search of the premises.

ForkLog is the biggest and most popular Russian-language online media covering the latest news and trends in Bitcoin and blockchain spaces.

The alleged reason for the search was a criminal case involving a group of Ukrainian and US nationals who engaged in fraudulent activities with bank cards.

According to SSU, the suspects “have been exchanging Bitcoin to hryvna (Ukrainian national currency) using online service ‘Forklog’. Representatives of the magazine were shocked and bewildered over these claims, since neither the main web-site, nor other associated resources have ever provided such services and do not even possess or run the required software.

Furthermore, none of the suspects were proven to have any connection with Forklog or its founder. Neither does ForkLog offer any ‘assistance’ with such kind of activities.

During the search SSU agents confiscated Mr. Kaplan’s laptop, several cold storage devices as well as other personal belongings.

Furthermore, none of the suspects were proven to have any connection with Forklog or its founder. Neither does ForkLog offer any ‘assistance’ with such kind of activities.

While searching Mr. Kaplan’s apartment, the SSU agents confiscated his laptop, several cold storage devices as well as other personal belongings.

Moreover, according to Mr. Kaplan, one of the agents tried to immediately transfer Bitcoins to another address right in the middle of the search. The agent was stopped only after Mr. Kaplan’s lawyer called the police, alarming them about what looked like an obvious robbery attempt.

However, already the next day a large amount in ETH was transferred from Mr. Kaplan’s wallet to a newly created address. Additionally, Mr. Kaplan reported a failed attempt by an unknown party to withdraw 3,000 hryvnas (around $110) from his personal bank card.

“I believe that this strange situation perfectly illustrates one of the possible scenarios for the relationships between the and the crypto community. That is why we decided to make it public. It’s not as much about protecting my personal interests as it is about protecting the interests of the entire community. This should send a warning to everyone who is in any way related to blockchain technologies. It doesn’t matter if you are a public figure”.

“Right now we are trying to get back what we believe was unlawfully seized from us. We find the attempts to transfer cryptocurrencies to wallets controlled by SSU agents to be an extremely strange practice. Other than ETH, large amounts in several other cryptocurrencies were moved to freshly created wallets. As to our Bitcoin wallets, the situation is not quite clear yet. During the search my lawyer has observed a score of other procedural violations, including interruption of video recording,” – says Anatoly Kaplan.

At the same time Forklog’s Odessa office was also being searched. As a result all available cash, expensive equipment (10 iMacs) and a bottle of Kraken rum were taken by SSU agents.

Artem Afian, Juscutum lawyer firm’s managing partner, promptly expressed intent to provide Mr. Kaplan with legal help. Mr. Afian insists that this incident bears particular significance for the crypto community at large.

“Financial regulators might still be on the fence regarding cryptocurrency, not being ready to even legally define it yet. But at the same time actions of the Ukrainian law enforcements demonstrate that cryptocurrency is a valuable enough asset to conduct an occasional raid in search for it. Traditionally searches and raids conducted on New Year’s eve are linked to jewelry shop heists. But this year cryptocurrency is trending.”

“We have no reason to doubt that this search was completely useless in regards to the criminal case in question. By the same logic you could accuse a news channel of gun trafficking on the premise of it running a story about gun trafficking,” – comments Artem Afian.

Mr. Afian also highlighted the fact that the search was sanctioned following the investigator’s claim that cryptocurrency was exchanged using Forklog media resource.

“On investigator’s part this is either a blatant incompetence or deliberate obfuscation of facts,” added Mr. Afian, “Such searches were a well-known practice of Ukrainian law enforcement before Euromaidan revolution and subsequent reforms. Still, even after the reforms took place, many IT companies in Ukraine have lived through the same nightmare, even though today the country’s accomplishments in the IT sphere are praised even on state level.”

“We expect a prompt and proper reaction from the authorities and swift return of seized equipment. As to the return of seized cryptocurrency and SSU agents’ legal liability, I can only say that this will be a highly symbolic and evincive case,” – concluded the lawyer

The latest wave of searches in IT companies offices and personal homes of the industry’s figureheads started as early as 2015, when more than 2,500 highly qualified professionals were forced to leave Ukraine. One of the most illustrative cases was the raid on the apartment belonging to Michael Chobanian, founder of Kuna Bitcoin Agency’s and co-founder of Bitcoin Foundation Ukraine. The alleged reason for the raid was a criminal investigation pertaining to Bitcoin trade information located on Kuna’s web-site.

According to various sources, IT sector in Ukraine has lost approximately $40 mln due to law enforcement pressure. Damages related to destruction and seizure of expensive equipment amounted to $9 mln.

Recently, due to the exponential growth that crypto industry has been demonstrating in 2017, SSU also started targeting operators of mining farms, even though mining is not illegal in Ukraine.

Despite all these events, Forklog intends to continue providing our loyal readers with quality content and the latest news from the world of blockchain tech and cryptocurrencies. Stay tuned.

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