Ukraine’s ESB Crack Down on Unregulated Crypto Exchanges

Ukraine’s Economic Security Bureau (ESB) has launched a thorough investigation into local cryptocurrency exchanges. This move comes after a shocking revelation that unregulated exchanges operating within Ukraine’s borders have resulted in a staggering loss of 3 billion Ukrainian hryvnia, equivalent to over $80 million in uncollected taxes.

Ukraine Aligning with European Standards

Earlier this year, Ukrainian regulators voted in favor of imposing an 18% tax on crypto gains, effective from 2024 onwards. Simultaneously, Kyiv has been actively working to harmonize its cryptocurrency regulations with those of the European Union (EU). Recent weeks have witnessed Ukraine’s commitment to implementing regulatory measures in line with the EU’s Markets in Crypto-Assets (MiCA) legislation.

Andriy Pashchuk, the esteemed head of Ukraine’s Economic Security Bureau, revealed in an exclusive interview with Forbes Ukraine that the investigative focus is primarily on trading platforms benefiting local users. Pashchuk disclosed that ESB analysts are leaving no stone unturned, employing sophisticated data services such as Chainalysis and Crystal Blockchain to meticulously trace cryptocurrency transactions.

In a bid to comprehensively assess the cryptocurrency turnover within digital wallets on Ukrainian exchanges, the ESB is incorporating open-source intelligence (OSINT) insights into its investigative arsenal.

While confirming that a pretrial investigation is underway against entities actively participating in the local cryptocurrency market, Pashchuk refrained from disclosing specific details regarding its current stage.

Staggering Trading Fees and Market Activity

In August 2023, the Economic Security Bureau (ESB) issued an official statement, shedding light on the enormity of the issue. Ukrainian crypto exchanges had reportedly accumulated a staggering $445 million in trading fees over the past decade. According to the bureau’s calculations, transactions involving major cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and Tether (USDT) within the domestic market had surpassed an astounding $55 billion between 2013 and 2023.

As Ukraine takes firm steps to regain control of its cryptocurrency landscape, the global crypto community watches closely, awaiting the outcome of this pivotal investigation.