Ukraine’s Law Enforcement Launch Raids on Local Miners

News and Analysis

Even though Ukraine’s legislation does not include any direct bans on cryptocurrency mining, miners have become objects of interest for the SBU, the country’s security service, and other law enforcement agencies.

Artem Afian, the managing partner of legal firm Juscutum, wrote in his column in Liga:

“Armed detachments attack farms and take everything valuable. You think it’s a quote from a history book? Alas, it isn’t. It’s not 1917, it’s 2017. And the farms don’t grow crops, they mine cryptocurrency. As for the rest, the comparison is correct. Raids on miners are launched.”

He states that the law enforcement has become excessively active in regard to cryptocurrencies in recent months.

“It’s not just ministry of internal affairs. It’s people who should have been concerned with national security that suddenly came to realize that overheated processing units pose a threat to the national security. So, as there are seemingly no other threats, they’ve engaged in requisitioning of produce. It’s quite obvious that the main motive for the raids is said requisitioning. The mining equipment is seized, and the rest is of little interest to the law enforcement. The main thing is to seize,” he wrote.

What Miners Are Accused of:

  • Smuggling: mining equipment is imported, and in most cases it lacks certain certification which allows the law enforcement to qualify the owner’s activity as smuggling. Even though the criminal code now lacks respective clause, the administrative liability justifies confiscation of the equipment.
  • Illegal connection to the power grid: power is a regular commodity, and the notion of theft is also applicable here. It’s bad news for those who ensured marginality of mining by connecting the equipment to the nearest electric lighting post.
  • Fake entrepreneurship. This cryptocurrency stuff and the virtual world that suddenly produces real money is but an illusion described in the criminal code.
  • Tax evasion. Any improvement in welfare of a Ukrainian national has to be reflected in tax statements. And now it covers cryptocurrencies as well.

Mr. Afian noted that there are only a few things that can’t be qualified in criminal terms in Ukraine. However, it doesn’t mean that mining is beyond the pale.

“The legal requirements are currently ambiguous, yet the main red lines that no one can cross are seen now. It’s unknown who will be better at that: lawyers or miners. Only time can tell. As for now, one shall adapt the existing business to the legal requirements,” he said.

In his comment to Mr. Afian also stated that there have been at least four searches at cryptocurrency mining platforms.

“I think the platforms are taken bearings of. It’s hard to say how. It might be power consumption, social info, or tracking of who bought mining equipment,” he stated.

Recent research by Digiconomist has shown that the power spent on bitcoin mining in the world has exceeded power consumption of certain major nations. The research also siggests that annual power consumption for bitcoin mining could provide 1.3 million American households with power.

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