14 ms·

How the Baltic states became the hub of crypto money laundering and fraud

169 points by kledru 3y ago

guerrilla 3y ago
They seem to be a hub of money laundering in general. Danske Bank and then Swedbank. I think the latter case may have been the biggest ever, or at least they got the biggest fine for it ever.
- Aerroon 3y ago
  Both are foreign banks though. The entire banking and telecom sectors are basically in the hands of foreign companies.
celtoid 3y ago
Jeez...why can't they launder their money through the Seychelles and Dominica like normal people do?
- anonym29 3y ago
  Seychelles had some legal changes in recent years that has made it much less attractive for such activity. Strange as it may seem, the US is now one of the best countries for money laundering, particularly a few states that are very business-friendly, like Delaware.
  - hiAndrewQuinn 3y ago
    It's true. There's a whole Planet Money episode about this somewhere in their archives; I think Economics Explained on YouTube also touches on this. Shell corps are the way to go (not that I would know, of course).
    - swagmoose 3y ago
      Episode 390: We Set Up An Offshore Company In A Tax Haven It's been a long time, but remember thinking how well done it was. TLDR was (as previous poster mentioned) that Delaware corps were best for anonymity.
- dpc050505 3y ago
  Canada is another great place to launder money.
  - steve_adams_86 3y ago
    In BC our GDP is 1/5 real estate. It’s surreal. I’m willing to be wrong, but my spider senses tell me a whole lot of weird stuff is going on in that sector.
bradgranath 3y ago
[flagged]
resolutebat 3y ago
We're finding about this because Estonia has transparent government services and a tradition of investigative journalism. These days, though, every crypto company and plenty of scamsters of all sorts seem to be located in Dubai, and good luck finding any transparency or doing any investigations in the United Arab Emirates.
- alephnerd 3y ago
  > every crypto company and plenty of scamsters of all sorts seem to be located in Dubai This is largely because of the Russia-Ukraine war/escalation in 2022. Before that, Russia was a major FDI player in the Baltic states, but after 2022 Russian citizens were largely cut off.
- deleted 3y ago
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- pavlov 3y ago
  > “These days, though, every crypto company and plenty of scamsters of all sorts seem to be located in Dubai” Hopefully they’ll one day scam the wrong sheik and get thrown in jail with no exit visas in sight. It’s one thing to run your crypto empire in a place like the Bahamas where you expect to be able to simply buy the government (like FTX openly bragged about). It’s another to run it in an authoritarian country where the money you’re stealing might belong to the billionaires who own the whole place and hand out death sentences to critics.
- Avamander 3y ago
  This transparency is actually even frowned upon by the EU due to privacy concerns. I don't agree though, businesses and who profits from them should be transparent.
- Beijinger 3y ago
  Isn't Dubai where the crypto queen is rumored to live? https://en.wikipedia.org/wiki/Ruja_Ignatova https://en.wikipedia.org/wiki/Ruja_Ignatova Edit: Bc it got downvoted first. I saw a documentary about her and she had tremendously good contacts to Dubai and it was hinted she lives there now. The Wiki page claims that she is rumoured to have been killed.
monero-xmr 3y ago
There are organised groups that will launder funds via Twitch tips. Another common pattern is to sell a digital good like an ebook. Money laundering cannot possibly be stamped out. The best you can do is try and limit giant one-time affairs through a bank, but laundering money is extraordinarily easy, with crypto or not.
- sabellito 3y ago
  How do they launder money via Twitch tips if the money already needs to be "in the system" for tipping to be possible?
  - olalonde 3y ago
    Multiple accounts, small amounts. The hard part about money laundering is not really getting money in the system. It's building a credible story for when someone (e.g. the police) asks where your money comes from. In this case, "I'm a popular Twitch streamer". Products that have high profit margins (e.g. streaming, digital products, gambling, software, etc.) are ideal for that and why they are often considered "high risk" by financial institutions.
  - deleted 3y ago
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  - dmbche 3y ago
    It was a way to extract money from stolen credit cards! It's quite easy to pay for card info, but difficult to use it without it being brought back to you.
  - RhodesianHunter 3y ago
    Money laundering isn't about getting money into the system, it's about making it look like it comes from sources that aren't illegal. If entity A can set up hundreds of fake twitch accounts, all of which tip entity B from A's pool of illegal money, then B can claim that it's revenue is entirely above board, it just came from Twitch tips.
mrcode007 3y ago
Here's an example of FSB getting funds . There's more coverage in Polish, because one of the executives is now in jail in Poland. https://finance.yahoo.com/news/criminal-case-against-failed-wex-212213740.html https://finance.yahoo.com/news/criminal-case-against-failed-... Similar stories played out with companies affiliated with Bitfinex IIRC, where people got arrested and connections to cartels and human trafficking were revealed.
- boeingUH60 3y ago
  The same guy mentioned in that article was also charged by the US Gov for hacking Mt. Gox; https://thetechee.com/us-govt-charges-two-russians-for-mt-gox-crypto-heist/ https://thetechee.com/us-govt-charges-two-russians-for-mt-go....
- dralley 3y ago
  Jan Marsalek, of the Wirecard fraud fame, who fled Germany to Russia to escape prosecution, is now suspected to have been an asset of Russian intelligence working alongside a ring of at least 5 other spies. https://www.wsj.com/world/europe/u-k-says-wirecard-executive-worked-with-five-suspected-russian-spies-a225f731 https://www.wsj.com/world/europe/u-k-says-wirecard-executive... One of the biggest credit card fraud empires on the planet was run by the son of a deputy in the Russian Duma. https://www.youtube.com/watch?v=6Chp12sEnWk&t=3m23s https://www.youtube.com/watch?v=6Chp12sEnWk&t=3m23s
  - TacticalCoder 3y ago
    > One of the biggest credit card fraud empires on the planet was run by the son of a deputy in the Russian Duma. $169 million in credit card fraud. I raise you with the biggest crypto exchange ponzi (so far) being run by the son of two Stanford lawyers and law teachers (dad teaching tax laws and mom teaching ethics, while having none). Well connected people to the US political elite, donating tens of millions to US political candidates. All the while having one of the most respected publication in the US (maybe not so much respected anymore now) actively participating in the scheme.
olalonde 3y ago
I know it sounds a bit crazy but what if the government hired people to investigate and arrest criminals instead of requiring private companies to do that? AML is a costly and ineffective security theater.
- anonym29 3y ago
  Plot twist: the government already does, it's even more costly than the private sector, it's still ineffective, and you get to pay for it!
  - olalonde 3y ago
    Yes, that was the joke. The police should do their job and they are to blame for failing to identify (and to arrest) scammers and criminals. Yet the article blames it all on private businesses, who really shouldn't be tasked with detective work in the first place.
    - anonym29 3y ago
      Sorry, Poe's Law got me here.
    - petre 3y ago
      If blames the failures of these states to identify and shut down operations literally working against them. These crypto companies acted as intermediaries for financing Russian mercs with money out of drugs ops.
- user3939382 3y ago
  A common strain of anarchism proposes all security is private.
  - logicchains 3y ago
    With anarchism there'd be no money laundering, because money laundering is the crime of "lying to the government about where you got your money".
donkykong22 3y ago
[dead]
hiAndrewQuinn 3y ago
I hope Estonia, Latvia and Lithuania don't continue down this path. I've looked at the graphs of their economic success over the past 3 decades with quite a bit of interest. I'd love to see all of them break through to the level of my adoptive homeland of Finland, and perhaps even beyond (if we don't find a way to make ourselves more business friendly first, of course!). Tremendous potential in all 3 of these places. I'd love to visit Riga or Tallinn one of these days.
- kuratkull 3y ago
  We won't, not our goal, not what we want. I think it'll fade into a small blip in our past vaguely remembered as "that crazy time when a lot of crypto companies opened offices and we shut them down". - Estonian
  - tleilaxu 3y ago
    As someone from the UK currently in Tallinn and about to start a job search here - I hope the (non-crypto) startups stay! Estonia is such a beautiful country, with such a wonderful culture and friendly people. I hope to do whatever part I can to contribute to Estonia’s success. …not with a crypto startup, though.
- thriftwy 3y ago
  I'm frankly not sure why you expect the level of Finland to remain where it was. 20 years ago Russian writer Viktor Pelevin remarked that "we are like a banana republic that has to import its bananas from Finland". But fast forward those 20 years, Finland itself is now a buffer state that buffers a dead end. In many ways, Baltic states and Finland made money trading with Russia, and if Russia stays AFK, their combined economic viability is in doubt. I'm not sure what is Finland's comparative advantage these days. What are things that are is cheaper to do in Finland (or Latvia) that you cannot do in Hungary, on Cyprus or in Denmark? The logistic leg is surely longer and I'm frankly not sure that you're going to pull it off.
  - dragandj 3y ago
yieldcrv 3y ago
Cayman Islands does this AML compliance officer requirement too, I pay out the ass for them (and so does every VC fund you fawn over) These jurisdictions really just keep adding layers of obligatory professionals and it neither changes the reputation of the jurisdiction or helps a fundamentally flawed problem of trying to whitelist transactions accurately I’m still of the predilection that states should just give up on trying to police money flows It doesn't work in the US, Caymans, Estonia, anywhere! Domestic gangs would always pass KYC, and foreign terrorism just simply isnt that expensive to always worry about funding them. Terrorism doesn't happen because nobody’s interested in flying planes into buildings. You don't need to encumber the GDP by 1% trying to prevent financing that, ostensibly.
- TacticalCoder 3y ago
  > These jurisdictions really just keep adding layers of obligatory professionals and it neither changes the reputation of the jurisdiction It depends. I used to live in Belgium and now in Luxembourg and both countries have been removed from an international gray list of countries refusing to share banking information (they do share now). Old article from 2009: https://www.politico.eu/article/luxembourg-and-belgium-removed-from-grey-list https://www.politico.eu/article/luxembourg-and-belgium-remov... There was a time where people would literally come to Luxembourg with duffelbags full of bank notes and nobody would ask anything. But these times are definitely gone. > I’m still of the predilection that states should just give up on trying to police money flows Having been directly hit by this and KYC/AML making my life miserable I fully agree with that. Some people have their entire bank account frozen, sometimes for months, because they make one wire transfer of a few thousands EUR to another country: happened to someone I know (who's an AML specialist, which is ironic) for buying a watch in Dubai and happened to someone else I know for... Paying for his wedding (which was taking place in another country than the one he was living in). His wedding nearly got cancelled due to zealots at the bank convinced they found an international drugs trafficker or something... The worst of the worst is that everybody at the bank is convinced they're some super important person, part of a global elite secret service or something, where nobody can talk. Worse than the mafia. And that they'll lose their job or go to jail if they ever mention to the client why their account is getting frozen. It's all pathetic really.
TacticalCoder 3y ago
> where over a billion euros have been laundered or defrauded GDP size: $105 trillion Percentage of the world GDP linked to criminal activities: 3% to 5% of the GDP (CIA official factbook). We're talking $3 to $5 TRILLION linked to criminal activities. Cryptocurrencies do not even register. Highly convenient scapegoat though. Crime, money laundering, fraud, ponzi, etc. all existed long before Satoshi created Bitcoin. Back to the $3 to $5 trillion linked to crime: KYC/AML brings back about $12 billion per year. A rounding error.
- onlyrealcuzzo 3y ago
  It doesn't matter what percentage of all fraud is crypto - it matters what percentage of crypto is fraud.
  - miohtama 3y ago
    > Overall, the share of all cryptocurrency activity associated with illicit activity has risen for the first time since 2019, from 0.12% in 2021 to 0.24% in 2022. [2] https://go.chainalysis.com/2023-crypto-crime-report-demo.html?aliId=eyJpIjoiMFVqS1VqbVVrbktDdEtLMiIsInQiOiI2cVhRTUhHZFBTdktQbVBycEZuZytRPT0ifQ%253D%253D https://go.chainalysis.com/2023-crypto-crime-report-demo.htm...
    - throwjdn 3y ago
      [dead]
    - nateabele 3y ago
      Indeed. Never mind the fact that all transactions take place on an immutable public ledger that’s available forever…
      - jiggawatts 3y ago
        “See, right here is the public record of how you were fooled into buying a worthless NFT. Then right here is where you converted USD into Crypto Bux so you could earn an impossible 25% interest rate… for a month… until Bux went to zero… right here. See? Can’t be a scam! It’s all public!”
throwaway4EE 3y ago
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Beijinger 3y ago
[flagged]
- deleted 3y ago
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- deleted 3y ago
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- jacquesm 3y ago
  Sorry? The 'business model of Estonia'? I think you're conflating the actions of a company within Estonia with the actions of the country as a whole. Also: if you've been scammed your first port of call is not the Estonian law authorities but your own (other) Estonian lawyer (as in: a lawyer that you pay).
  - deleted 3y ago
    [deleted]
  - jacquesm 3y ago
    Child comment is now dead (and rightly so, but this was my reply). > Yep. Have you read the headline of this post? Yes, I did, as well as the post itself, in fact this sort of comment is against the guidelines but since you're a new account maybe you want to give them a read? Link at the bottom of every page. > Good luck with that. Trust me, we tried. I've had several dealings with lawyers in Estonia and no reason for a complaint so far. But I didn't get them from some other website, I asked around in Estonia with business contacts there. > Again, if financial institutions are involved I am not sure you are right. This are is heavy regulated from AML to KYC to whatever. That doesn't matter. > Crypto scammers plague Estonia’s e-residency program Yes, they do. Unfortunately. They also plague Twitter, Facebook, HN at times, the United States and the start-up scene in general. That's nothing to do with Estonia per-se but more a reflection of how easy it is to set up a business somewhere. > This comes only three months after the crypto-friendly nation became the epicenter of a $220 billion money laundering scandal. Latvia had a similar issue a few years ago, they US basically pulled the plug on that and since then it's a lot better. But countries with underpowered regulatory entities will always be at risk of these things. But that does not make it 'the businessmodel of the country' any more than that the drug trade is the business model of the Netherlands or the United States. It's a clear reflection of facts of geography, ability to regulate and oversee, ability to police, experience and so on. The Baltics are attractive because (1) they don't have a whole lot of experience fighting this stuff (2) are proximate to some very large sources of illicit funds (3) lack manpower and funds themselves (see your quote about 'how big is their GDP' -> that's not proof this is their business model but an excellent reason why they can't do as much about it as they should). As far as I'm concerned Estonia (and Latvia and Lithuania) can pull the plug on all crypto companies in their respective company registries. And let's not get started about Slovakia, Serbia and Macedonia who all have their own problems to work through.
0xDEF 3y ago
This has been going on before crypto. Between 2007-2015 some very wealthy Russians laundered more than €200 billion from Russia to tax havens around the world using Danske Bank's branch in Estonia. https://en.wikipedia.org/wiki/Danske_Bank_money_laundering_scandal https://en.wikipedia.org/wiki/Danske_Bank_money_laundering_s...
gryzzly 3y ago
and before that the biggest money laundering https://en.wikipedia.org/wiki/Danske_Bank_money_laundering_scandal https://en.wikipedia.org/wiki/Danske_Bank_money_laundering_s... (kinda enabling Putin to become what he is)
notpushkin 3y ago
The whole current AML scene is very sad. Sanctions against Russia don't harm any of the Putin's friends who can figure out another way to get money across the border. Sanctions against Russia only harm ordinary Russians.
- tcgv 3y ago
  > Sanctions against Russia only harm ordinary Russians. That's by design. Sanctions put pressure to the country as a whole. Once people start getting angry they will question their leadership and maybe demand for changes. Sure, sanctions can also target specific individuals, like the russian elite, olygarchs, but that alone doesn't change the status quo.
  - masijo 3y ago
    I propose starving people to death in countries we don't like. That way the people will surely revolt against their government and we can then go in and spread democracy :)
    - lmm 3y ago
      Well isn't that how going to war works? You're not going to be shooting the political leaders, you're going to be shooting the poor chumps at the bottom. Economic sanctions are not great, but they're meant to be an alternative to war. When you really need a country to change course, anything you can do is going to involve hurting regular citizens there, it's just about finding the least bad option.
    - csomar 3y ago
      > I propose starving people to death in countries we don't like. That way the people will surely revolt against their government and we can then go in and spread democracy :) That's what the US has always been doing.
    - tcgv 3y ago
      I'm not saying that I agree with it and neither that it works though ;)
dheera 3y ago
States or countries? We need to stop conflating these two words.
uptownfunk 3y ago
I am glad I never got involved. I know I shouldn’t ascribe a feeling to what is essentially some type of distributed self maintaining database (yes I know it is more than that) but there was always something that just felt off about that entire technology.
EVa5I7bHFq9mnYK 3y ago
The article only mentions how it benefits Russians, but omits the fact that almost any Ukrainian or Ru opposition donation page has crypto addresses on it. The money flows both ways, the way it was intended. Also, Russians laundered hundreds of billions through Baltic banks (Danske Bank, Swedbank etc) with oh so real AML officers.
- throwaway290 3y ago
  Crypto is actually net negative for UA if it is what keeps Russia going. If crypto vanished overnight UA would still get aid through legal channels while Russia would be crippled. Btw I think those bank laundering events you mention date to before the war.
  - demosito666 3y ago
    Russia gets its money from selling oil and gas. Crypto is like 0.000000001% of the money that fund the war so no, it does not keep Russia going.
    - throwaway290 3y ago
      It's not about being able to get money but being able to spend it
      - EVa5I7bHFq9mnYK 3y ago
        American and European companies supplying parts for Russian rockets are paid in dollars and euros, not in crypto, I can assure you.
        throwaway290 3y ago
        Any more info/sources, or only assurances from EVa5I7bHFq9mnYK?
        r00fus 3y ago

169 points by kledru 3y ago

They seem to be a hub of money laundering in general. Danske Bank and then Swedbank. I think the latter case may have been the biggest ever, or at least they got the biggest fine for it ever.

Aerroon 3y ago
Both are foreign banks though. The entire banking and telecom sectors are basically in the hands of foreign companies.

celtoid 3y ago

Jeez...why can't they launder their money through the Seychelles and Dominica like normal people do?

anonym29 3y ago
Seychelles had some legal changes in recent years that has made it much less attractive for such activity. Strange as it may seem, the US is now one of the best countries for money laundering, particularly a few states that are very business-friendly, like Delaware.
- hiAndrewQuinn 3y ago
  It's true. There's a whole Planet Money episode about this somewhere in their archives; I think Economics Explained on YouTube also touches on this. Shell corps are the way to go (not that I would know, of course).
  - swagmoose 3y ago
    Episode 390: We Set Up An Offshore Company In A Tax Haven It's been a long time, but remember thinking how well done it was. TLDR was (as previous poster mentioned) that Delaware corps were best for anonymity.
dpc050505 3y ago
Canada is another great place to launder money.
- steve_adams_86 3y ago
  In BC our GDP is 1/5 real estate. It’s surreal. I’m willing to be wrong, but my spider senses tell me a whole lot of weird stuff is going on in that sector.

bradgranath 3y ago

[flagged]

resolutebat 3y ago

We're finding about this because Estonia has transparent government services and a tradition of investigative journalism. These days, though, every crypto company and plenty of scamsters of all sorts seem to be located in Dubai, and good luck finding any transparency or doing any investigations in the United Arab Emirates.

alephnerd 3y ago
> every crypto company and plenty of scamsters of all sorts seem to be located in Dubai This is largely because of the Russia-Ukraine war/escalation in 2022. Before that, Russia was a major FDI player in the Baltic states, but after 2022 Russian citizens were largely cut off.
deleted 3y ago
[deleted]
pavlov 3y ago
> “These days, though, every crypto company and plenty of scamsters of all sorts seem to be located in Dubai” Hopefully they’ll one day scam the wrong sheik and get thrown in jail with no exit visas in sight. It’s one thing to run your crypto empire in a place like the Bahamas where you expect to be able to simply buy the government (like FTX openly bragged about). It’s another to run it in an authoritarian country where the money you’re stealing might belong to the billionaires who own the whole place and hand out death sentences to critics.
Avamander 3y ago
This transparency is actually even frowned upon by the EU due to privacy concerns. I don't agree though, businesses and who profits from them should be transparent.
Beijinger 3y ago
Isn't Dubai where the crypto queen is rumored to live? https://en.wikipedia.org/wiki/Ruja_Ignatova https://en.wikipedia.org/wiki/Ruja_Ignatova Edit: Bc it got downvoted first. I saw a documentary about her and she had tremendously good contacts to Dubai and it was hinted she lives there now. The Wiki page claims that she is rumoured to have been killed.

monero-xmr 3y ago

There are organised groups that will launder funds via Twitch tips. Another common pattern is to sell a digital good like an ebook. Money laundering cannot possibly be stamped out. The best you can do is try and limit giant one-time affairs through a bank, but laundering money is extraordinarily easy, with crypto or not.

sabellito 3y ago
How do they launder money via Twitch tips if the money already needs to be "in the system" for tipping to be possible?
- olalonde 3y ago
  Multiple accounts, small amounts. The hard part about money laundering is not really getting money in the system. It's building a credible story for when someone (e.g. the police) asks where your money comes from. In this case, "I'm a popular Twitch streamer". Products that have high profit margins (e.g. streaming, digital products, gambling, software, etc.) are ideal for that and why they are often considered "high risk" by financial institutions.
- deleted 3y ago
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- dmbche 3y ago
  It was a way to extract money from stolen credit cards! It's quite easy to pay for card info, but difficult to use it without it being brought back to you.
- RhodesianHunter 3y ago
  Money laundering isn't about getting money into the system, it's about making it look like it comes from sources that aren't illegal. If entity A can set up hundreds of fake twitch accounts, all of which tip entity B from A's pool of illegal money, then B can claim that it's revenue is entirely above board, it just came from Twitch tips.

mrcode007 3y ago

Here's an example of FSB getting funds . There's more coverage in Polish, because one of the executives is now in jail in Poland. https://finance.yahoo.com/news/criminal-case-against-failed-wex-212213740.html https://finance.yahoo.com/news/criminal-case-against-failed-... Similar stories played out with companies affiliated with Bitfinex IIRC, where people got arrested and connections to cartels and human trafficking were revealed.

boeingUH60 3y ago
The same guy mentioned in that article was also charged by the US Gov for hacking Mt. Gox; https://thetechee.com/us-govt-charges-two-russians-for-mt-gox-crypto-heist/ https://thetechee.com/us-govt-charges-two-russians-for-mt-go....
dralley 3y ago
Jan Marsalek, of the Wirecard fraud fame, who fled Germany to Russia to escape prosecution, is now suspected to have been an asset of Russian intelligence working alongside a ring of at least 5 other spies. https://www.wsj.com/world/europe/u-k-says-wirecard-executive-worked-with-five-suspected-russian-spies-a225f731 https://www.wsj.com/world/europe/u-k-says-wirecard-executive... One of the biggest credit card fraud empires on the planet was run by the son of a deputy in the Russian Duma. https://www.youtube.com/watch?v=6Chp12sEnWk&t=3m23s https://www.youtube.com/watch?v=6Chp12sEnWk&t=3m23s
- TacticalCoder 3y ago
  > One of the biggest credit card fraud empires on the planet was run by the son of a deputy in the Russian Duma. $169 million in credit card fraud. I raise you with the biggest crypto exchange ponzi (so far) being run by the son of two Stanford lawyers and law teachers (dad teaching tax laws and mom teaching ethics, while having none). Well connected people to the US political elite, donating tens of millions to US political candidates. All the while having one of the most respected publication in the US (maybe not so much respected anymore now) actively participating in the scheme.

olalonde 3y ago

I know it sounds a bit crazy but what if the government hired people to investigate and arrest criminals instead of requiring private companies to do that? AML is a costly and ineffective security theater.

anonym29 3y ago
Plot twist: the government already does, it's even more costly than the private sector, it's still ineffective, and you get to pay for it!
- olalonde 3y ago
  Yes, that was the joke. The police should do their job and they are to blame for failing to identify (and to arrest) scammers and criminals. Yet the article blames it all on private businesses, who really shouldn't be tasked with detective work in the first place.
  - anonym29 3y ago
    Sorry, Poe's Law got me here.
  - petre 3y ago
    If blames the failures of these states to identify and shut down operations literally working against them. These crypto companies acted as intermediaries for financing Russian mercs with money out of drugs ops.
user3939382 3y ago
A common strain of anarchism proposes all security is private.
- logicchains 3y ago
  With anarchism there'd be no money laundering, because money laundering is the crime of "lying to the government about where you got your money".

donkykong22 3y ago

[dead]

hiAndrewQuinn 3y ago

I hope Estonia, Latvia and Lithuania don't continue down this path. I've looked at the graphs of their economic success over the past 3 decades with quite a bit of interest. I'd love to see all of them break through to the level of my adoptive homeland of Finland, and perhaps even beyond (if we don't find a way to make ourselves more business friendly first, of course!). Tremendous potential in all 3 of these places. I'd love to visit Riga or Tallinn one of these days.

kuratkull 3y ago
We won't, not our goal, not what we want. I think it'll fade into a small blip in our past vaguely remembered as "that crazy time when a lot of crypto companies opened offices and we shut them down". - Estonian
- tleilaxu 3y ago
  As someone from the UK currently in Tallinn and about to start a job search here - I hope the (non-crypto) startups stay! Estonia is such a beautiful country, with such a wonderful culture and friendly people. I hope to do whatever part I can to contribute to Estonia’s success. …not with a crypto startup, though.
thriftwy 3y ago
I'm frankly not sure why you expect the level of Finland to remain where it was. 20 years ago Russian writer Viktor Pelevin remarked that "we are like a banana republic that has to import its bananas from Finland". But fast forward those 20 years, Finland itself is now a buffer state that buffers a dead end. In many ways, Baltic states and Finland made money trading with Russia, and if Russia stays AFK, their combined economic viability is in doubt. I'm not sure what is Finland's comparative advantage these days. What are things that are is cheaper to do in Finland (or Latvia) that you cannot do in Hungary, on Cyprus or in Denmark? The logistic leg is surely longer and I'm frankly not sure that you're going to pull it off.
- dragandj 3y ago

yieldcrv 3y ago

Cayman Islands does this AML compliance officer requirement too, I pay out the ass for them (and so does every VC fund you fawn over) These jurisdictions really just keep adding layers of obligatory professionals and it neither changes the reputation of the jurisdiction or helps a fundamentally flawed problem of trying to whitelist transactions accurately I’m still of the predilection that states should just give up on trying to police money flows It doesn't work in the US, Caymans, Estonia, anywhere! Domestic gangs would always pass KYC, and foreign terrorism just simply isnt that expensive to always worry about funding them. Terrorism doesn't happen because nobody’s interested in flying planes into buildings. You don't need to encumber the GDP by 1% trying to prevent financing that, ostensibly.

TacticalCoder 3y ago
> These jurisdictions really just keep adding layers of obligatory professionals and it neither changes the reputation of the jurisdiction It depends. I used to live in Belgium and now in Luxembourg and both countries have been removed from an international gray list of countries refusing to share banking information (they do share now). Old article from 2009: https://www.politico.eu/article/luxembourg-and-belgium-removed-from-grey-list https://www.politico.eu/article/luxembourg-and-belgium-remov... There was a time where people would literally come to Luxembourg with duffelbags full of bank notes and nobody would ask anything. But these times are definitely gone. > I’m still of the predilection that states should just give up on trying to police money flows Having been directly hit by this and KYC/AML making my life miserable I fully agree with that. Some people have their entire bank account frozen, sometimes for months, because they make one wire transfer of a few thousands EUR to another country: happened to someone I know (who's an AML specialist, which is ironic) for buying a watch in Dubai and happened to someone else I know for... Paying for his wedding (which was taking place in another country than the one he was living in). His wedding nearly got cancelled due to zealots at the bank convinced they found an international drugs trafficker or something... The worst of the worst is that everybody at the bank is convinced they're some super important person, part of a global elite secret service or something, where nobody can talk. Worse than the mafia. And that they'll lose their job or go to jail if they ever mention to the client why their account is getting frozen. It's all pathetic really.

TacticalCoder 3y ago

> where over a billion euros have been laundered or defrauded GDP size: $105 trillion Percentage of the world GDP linked to criminal activities: 3% to 5% of the GDP (CIA official factbook). We're talking $3 to $5 TRILLION linked to criminal activities. Cryptocurrencies do not even register. Highly convenient scapegoat though. Crime, money laundering, fraud, ponzi, etc. all existed long before Satoshi created Bitcoin. Back to the $3 to $5 trillion linked to crime: KYC/AML brings back about $12 billion per year. A rounding error.

onlyrealcuzzo 3y ago
It doesn't matter what percentage of all fraud is crypto - it matters what percentage of crypto is fraud.
- miohtama 3y ago
  > Overall, the share of all cryptocurrency activity associated with illicit activity has risen for the first time since 2019, from 0.12% in 2021 to 0.24% in 2022. [2] https://go.chainalysis.com/2023-crypto-crime-report-demo.html?aliId=eyJpIjoiMFVqS1VqbVVrbktDdEtLMiIsInQiOiI2cVhRTUhHZFBTdktQbVBycEZuZytRPT0ifQ%253D%253D https://go.chainalysis.com/2023-crypto-crime-report-demo.htm...
  - throwjdn 3y ago
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  - nateabele 3y ago
    Indeed. Never mind the fact that all transactions take place on an immutable public ledger that’s available forever…
    - jiggawatts 3y ago
      “See, right here is the public record of how you were fooled into buying a worthless NFT. Then right here is where you converted USD into Crypto Bux so you could earn an impossible 25% interest rate… for a month… until Bux went to zero… right here. See? Can’t be a scam! It’s all public!”

throwaway4EE 3y ago

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Beijinger 3y ago

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jacquesm 3y ago
Sorry? The 'business model of Estonia'? I think you're conflating the actions of a company within Estonia with the actions of the country as a whole. Also: if you've been scammed your first port of call is not the Estonian law authorities but your own (other) Estonian lawyer (as in: a lawyer that you pay).
- deleted 3y ago
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- jacquesm 3y ago
  Child comment is now dead (and rightly so, but this was my reply). > Yep. Have you read the headline of this post? Yes, I did, as well as the post itself, in fact this sort of comment is against the guidelines but since you're a new account maybe you want to give them a read? Link at the bottom of every page. > Good luck with that. Trust me, we tried. I've had several dealings with lawyers in Estonia and no reason for a complaint so far. But I didn't get them from some other website, I asked around in Estonia with business contacts there. > Again, if financial institutions are involved I am not sure you are right. This are is heavy regulated from AML to KYC to whatever. That doesn't matter. > Crypto scammers plague Estonia’s e-residency program Yes, they do. Unfortunately. They also plague Twitter, Facebook, HN at times, the United States and the start-up scene in general. That's nothing to do with Estonia per-se but more a reflection of how easy it is to set up a business somewhere. > This comes only three months after the crypto-friendly nation became the epicenter of a $220 billion money laundering scandal. Latvia had a similar issue a few years ago, they US basically pulled the plug on that and since then it's a lot better. But countries with underpowered regulatory entities will always be at risk of these things. But that does not make it 'the businessmodel of the country' any more than that the drug trade is the business model of the Netherlands or the United States. It's a clear reflection of facts of geography, ability to regulate and oversee, ability to police, experience and so on. The Baltics are attractive because (1) they don't have a whole lot of experience fighting this stuff (2) are proximate to some very large sources of illicit funds (3) lack manpower and funds themselves (see your quote about 'how big is their GDP' -> that's not proof this is their business model but an excellent reason why they can't do as much about it as they should). As far as I'm concerned Estonia (and Latvia and Lithuania) can pull the plug on all crypto companies in their respective company registries. And let's not get started about Slovakia, Serbia and Macedonia who all have their own problems to work through.

0xDEF 3y ago

This has been going on before crypto. Between 2007-2015 some very wealthy Russians laundered more than €200 billion from Russia to tax havens around the world using Danske Bank's branch in Estonia. https://en.wikipedia.org/wiki/Danske_Bank_money_laundering_scandal https://en.wikipedia.org/wiki/Danske_Bank_money_laundering_s...

gryzzly 3y ago

and before that the biggest money laundering https://en.wikipedia.org/wiki/Danske_Bank_money_laundering_scandal https://en.wikipedia.org/wiki/Danske_Bank_money_laundering_s... (kinda enabling Putin to become what he is)

notpushkin 3y ago

The whole current AML scene is very sad. Sanctions against Russia don't harm any of the Putin's friends who can figure out another way to get money across the border. Sanctions against Russia only harm ordinary Russians.

tcgv 3y ago
> Sanctions against Russia only harm ordinary Russians. That's by design. Sanctions put pressure to the country as a whole. Once people start getting angry they will question their leadership and maybe demand for changes. Sure, sanctions can also target specific individuals, like the russian elite, olygarchs, but that alone doesn't change the status quo.
- masijo 3y ago
  I propose starving people to death in countries we don't like. That way the people will surely revolt against their government and we can then go in and spread democracy :)
  - lmm 3y ago
    Well isn't that how going to war works? You're not going to be shooting the political leaders, you're going to be shooting the poor chumps at the bottom. Economic sanctions are not great, but they're meant to be an alternative to war. When you really need a country to change course, anything you can do is going to involve hurting regular citizens there, it's just about finding the least bad option.
  - csomar 3y ago
    > I propose starving people to death in countries we don't like. That way the people will surely revolt against their government and we can then go in and spread democracy :) That's what the US has always been doing.
  - tcgv 3y ago
    I'm not saying that I agree with it and neither that it works though ;)

dheera 3y ago

States or countries? We need to stop conflating these two words.

uptownfunk 3y ago

I am glad I never got involved. I know I shouldn’t ascribe a feeling to what is essentially some type of distributed self maintaining database (yes I know it is more than that) but there was always something that just felt off about that entire technology.

EVa5I7bHFq9mnYK 3y ago

The article only mentions how it benefits Russians, but omits the fact that almost any Ukrainian or Ru opposition donation page has crypto addresses on it. The money flows both ways, the way it was intended. Also, Russians laundered hundreds of billions through Baltic banks (Danske Bank, Swedbank etc) with oh so real AML officers.

throwaway290 3y ago
Crypto is actually net negative for UA if it is what keeps Russia going. If crypto vanished overnight UA would still get aid through legal channels while Russia would be crippled. Btw I think those bank laundering events you mention date to before the war.
- demosito666 3y ago
  Russia gets its money from selling oil and gas. Crypto is like 0.000000001% of the money that fund the war so no, it does not keep Russia going.
  - throwaway290 3y ago
    It's not about being able to get money but being able to spend it
    - EVa5I7bHFq9mnYK 3y ago
      American and European companies supplying parts for Russian rockets are paid in dollars and euros, not in crypto, I can assure you.
      - throwaway290 3y ago
        Any more info/sources, or only assurances from EVa5I7bHFq9mnYK?
      - r00fus 3y ago