In the unfolding economic warfare with Russia, the US Internal Revenue Service (IRS) is said to have allied with Ukrainian agencies to fortify their defenses and strategies. This collaboration between the IRS and Ukraine is reportedly focused on unmasking and curbing illicit cryptocurrency transactions, primarily those initiated by Russian oligarchs and corporations.
The IRS Offers Advanced Training for Ukrainian Enforcement Agencies
The IRS’s involvement goes beyond mere collaboration. It has allegedly provided advanced training to Ukrainian law enforcement agencies to facilitate the detection of unauthorized cryptocurrency transactions.
This move comes amidst concerns that Russia might leverage digital currencies to bypass sanctions imposed by the Western countries following the initiation of military conflict in Ukraine. These sanctions deter Russia’s war-related activities and strengthen Ukraine’s economic resilience.
The Role of Cryptocurrency in Financing War-related Activities
Digital assets, despite their numerous benefits, have posed a significant concern for entities and experts who argue that these could be a potential tool for Russia to finance war-related efforts.
The US Treasury Department responded by sanctioning five crypto addresses linked to Task Force Rusich, a notorious Russian paramilitary group implicated in acts of violence against soldiers.
The IRS’s Contribution to Ukraine’s Crypto Surveillance
The Wall Street Journal reported that the IRS granted Ukraine licenses to use the Chinalysis Reactor, an investigation software that associates cryptocurrency transactions with real-world entities. This tool would allow Ukrainian investigators to track unlawful activities by Russian entities.
Moreover, the IRS has provided in-person training to Ukrainian investigators, which may offer Ukraine a strategic advantage in its economic confrontation with Russia. As Eduard Fedorov, Acting Director of Ukraine’s Economic Security Bureau, aptly stated, “We resist the aggressor state not only on the battlefield but also on the economic front.”
Ukrainian agencies are also striving to stifle Russian fundraising campaigns that leverage cryptocurrencies. Yurii Vykhodets, the head of the cyber department of Ukraine’s National Police, emphasized the importance of identifying and eliminating support centers for occupation forces that raise war funds through cryptocurrency.
The Global Response to Russia’s Actions
Russia’s encroachment on Ukraine in February of the previous year, described as a “special military operation” by President Vladimir Putin, has sparked severe sanctions from the global community.
Notably, the USA, the European Union, Australia, and other nations have imposed rigorous financial restrictions to halt the aggression and undermine Russia’s military prowess.
Prominent figures and agencies have urged crypto companies to sever ties with the invaders, arguing that sanctioned oligarchs and organizations could exploit digital currencies to evade penalties or finance war-related operations.
Christine Lagarde, the President of the European Central Bank, suggested entities engaged with Russia could face increased scrutiny.
IMF’s Perspective on Cryptocurrency and Sanctions
The International Monetary Fund (IMF) also shared its perspective, suggesting that the nation could use Bitcoin and altcoins to sidestep restrictions.
The US Treasury Department responded by blacklisting five cryptocurrency addresses linked to Task Force Rusich, a “neo-Nazi paramilitary group” involved in combat and accused of committing heinous crimes on Ukrainian soil.