Hunters bitcoins. How safe to produce, store and exchange cryptocurrency

Andrew, sysadmin of one of the Kiev enterprises, learned about crypto currency a few years ago. The idea was inspired, and he started mine (produce) bitcoins on hardware that is gathered himself and installed it on the glazed balcony. For some time his device has successfully done all the calculations, competing with other system-connected computers for the right to enter the block transaction into the blockchain (the registry, which stores all records about operations with bitcoin). For each generated block the owner of computing power comes the reward in the form of a new amount of cryptocoins.

Over time, the efficiency began to decline. The requirements for computing power grew, and electricity is expensive. Invest in a new “iron” Andrew did not dare, and the fact that nominal, hastened to sell, at some time afraid of sharp fluctuations of bitcoin. “If I knew that the course skaknet, would have, perhaps, an apartment in Kiev bought,” says sysadmin. However, mining on the balcony it’s not doing any more: bitcoin farms currently producing promising capabality on an industrial scale, not to compete. In addition, the imagination paints a picture of how security forces in masks catch the miners are almost at the apartment.

 Exercises in the pool

The story, which so frightened all those involved in the cryptocurrency, occurred in early August in the Institute of electric welding named by E. A. Paton. The attention of the security forces has attracted a bitcoin farm is in an abandoned pool Institute. Investigators found 200 pieces of computer equipment for mining cryptocurrency. The farm law enforcement officers stopped. Remarkably, a search warrant the court issued on the basis of pre-trial investigation, which found that several persons with prior agreement allegedly fake Bank documents.

The lawyers who Focus asked to comment on the situation, could not find logic in the actions of the security forces. Senior associate of ILF Integrites Vladimir Rudnichenko notes that in the Criminal code of Ukraine does not provide a separate offence for such acts as “fake Bank documents”, and Bitcoin and all that it involves, does not have settled status. “In the Criminal code on electronic media only mentions article 200 “forgery of documents for transfer, payment cards or other means of access to Bank accounts, electronic money, etc.” But in Ukraine, Bitcoin does not have the status of electronic money, so it is unclear on what basis the court gave permission for a search,” — said the interlocutor of Focus.

Perhaps it is the unresolved status of the cryptocurrency and piques the interest of law enforcement bodies to this business. “The void in the domestic legislation that has formed around bitcoin, left the space for manipulation with articles of the criminal code. And since nature abhors a vacuum, the latter began to fill in the definition of the investigative judges on searches, mining centers,” — says the lawyer of Juscutum TMT company Nestor Dubnevich.

However, experts rule out that the incident is an organized and consistent campaign at the state level. The company’s lawyer, ICF Legal Service Viktor Danilov considers “the case of the pool” as another manifestation of the lawlessness COP and not the implementation of the official policy of the state. According to him, evidenced a clear misunderstanding of the principle of cryptocurrency transactions in the order of the investigating judge, in which there is frankly unprofessional approach.

“I would not look for in this story of worldwide conspiracy. Most likely, someone from the leadership of the SBU chattered somewhere on the banner “buy bitcoins” and saw the price. All this signifies first and foremost about the incredible level of incompetence and law enforcement, and the court,” agrees partner at Axon Partners Dmytro Gadomsky.

Indeed, the security forces could “excite” the resonant information about the multiple growth of bitcoin and other cryptocurrencies, which diverges in the media since the beginning of 2017. Recall: in 2015, when the police obsessed with it people, among the possible prerequisites such pressure is called the wave of information about foreign money contracts, high income and dollar wages in the industry. So you searched in a hurry to where the smell of big money.

Operators cryptocurrency market do not exclude that eventually the situation will end with a settlement offer. “Recent precedent shows that we have still not legal in the state and SBU small salaries,” says the development Manager of the company’s business Hotmine Alexander Momot.

Who does not risk

Case in the pool — not the only, and apparently not the last precedent in the interest of security forces to the cryptocurrency. As told to Trick Viktor Danilov, today there are already about 4-5 persecution cryptocurrency farms, the last of which was the RAID on the farm in Kropyvnyts’ke on August 11, where law enforcement officers seized a significant amount of equipment, documentation and money to entrepreneurs was accused of laundering about 200 million UAH.

According to the lawyer-analyst international law firm Kinstellar, lawyer Alexei Boreskova, the facts of the persecution bitcoin farms indicate that law enforcement authorities have opened a new scope of work and all who are seriously working with cryptocurrencies, you can expect interest on their part.

Anyone get any searches?

Before you assess the risks, it is necessary to divide users of the cryptocurrency into several categories: savers in crypto-currencies; traders who make speculative trades with cryptocurrencies; and miners, producing new kryptonite.

“Holders of crypto-currencies at the legislative level is not in danger, and clarifying the status of bitcoin and other cryptocurrencies in Ukraine the situation will only improve”, — soothes marketer bitcoin Agency KUNA Vadim Popov. But traders, in his opinion, should be legalized, or at least to prepare for this is to make FOP (natural persons entrepreneur), and to pay a fixed tax.

With mining, the situation is ambiguous. As noted by Alex Barczewski, by itself, mining is not a serious legal risk, as a matter of fact it is a service of leasing of processing equipment for processing information about transactions in bitcoin, as a payment for which the miners receive a code called “bitcoin”. This can be compared to a computer game where players earn virtual money by performing a series of actions. According to Boreskova while bitcoin will not be recognized in Ukraine, monetary value, nor any responsibility for its production and storage can be discussed.

However, Alexander Momot considers that mining is now also associated with risks. “The more you farm the higher the risk. To minimise it, you need to legally enter into contracts for the supply of electricity and to pay at the full rate, which for legal entities is quite high,” — said the interlocutor of Focus.

Most trouble lies in wait for those who are in Ukraine to convert bitcoin into traditional assets. “Risks occur when you try to convert bitcoin to national currency, currency values, precious metals or commodities, since such operations on the territory of Ukraine is beyond the law” — warns Alexey Borchevsky. He advises not to experiment with known schemes to cash, and to use their bitcoins abroad or on the Internet, not forgetting to pay taxes as any activity aimed at receiving income.

What’s next

While in Ukraine, the security forces are trying to demonize mining-farms, in most developed countries mining has become normal, a little remarkable businesses that work legally and pay taxes. Exceptions mostly in the third world, where the situation with observance of rights and freedoms in General leaves much to be desired.

“Problems with the activity of bitcoin farms occur in countries where governments are trying to ban or restrict the use of crypto-currencies (Russia, Bolivia, Ecuador, Bangladesh). To them bitcoin is seen as a threat to national currency, and mining — as counterfeit money,” says Advisor to the AO Spenser &Kauffmann Nikolai Likhachev. The example he cites Russia, where Investigative Committee and the Ministry of Finance has proposed to introduce criminal liability for use of cryptocurrencies.

After the incident in the swimming pool of the Institute Paton on the NBU website on 11 August 2017 have an official statement, which confirmed the uncertainty of the legal status of cryptocurrency in Ukraine. In response to the inquiry Focus of the regulator was limited to a reference to this document. In particular, it is reported that in other countries klassificeret Bitcoin for virtual currency, a substitute for money, intangible assets, virtual goods, etc., and the national Bank, for its part, has yet to officially support either of the given definitions.

The NBU and the Ministry of Finance, State fiscal service and other government agencies are going to consider the question of the legal status and regulation of Bitcoin at the next meeting of the financial stability Board, which will take place before the end of August. Apparently, this is only the first step in resolving the situation and the legal vacuum will continue for at least several months.

Nestor Dubnevich hopes that the above statement of the regulator becomes an obstacle to the use by police officers the provisions of the “surrogate nature” of cryptocurrencies, which the security forces have chosen to justify raids on the mining centers. “The buffer of time that is taken by the regulator to find the definition of bitcoin leaves a legal vacuum in the regulation of virtual assets, allowing the investigators to “be creative” with the offences in applications for searches. Flight of fancy starts from “the issue of unlicensed e-money” and ends with “financing terrorism,” concludes Dubnevich.

• Read also: Ukrainian MPs keep their savings in bitcoins

Further development of the situation depends on the decision that comes to regulators, and its implementation in practice. “There is always a risk that the legislature will go against logic, as it has been repeatedly observed in the history of Ukrainian lawmaking. However, the probability of this is low. To outlaw technologies that are rapidly gaining popularity, is a strategically wrong move”, — said Victor Danilov.

• See also: NBU gathered to determine the legal status of bitcoin in Ukraine

However, the liberal position of regulators in the future does not guarantee the absence of pressure from the security forces. “You can take the most progressive laws, but it does not hurt the security forces, based on their understanding of these laws come with a search warrant, to impute any article and arrest equipment”, — said Oleksandr Momot. However, he doubts that the regulation of cryptocurrency in Ukraine will be implemented in the most progressive version. According to Momot, that Ukraine risks losing tens of billions of hryvnia over the next few years. Because businesses will be forced to take out a mining farm from Ukraine that will deprive our country of significant foreign exchange earnings.