An article in a major Russian newspaper has claimed that officials from the Russian Ministry of Internal Affairs accepted bribes in the form of Bitcoin (BTC) and Ethereum (ETH) from a cryptocurrency exchange executive. The two officials, named Georgy Satyukov and Dmitry Sokolov, were allegedly employees of a secret division within the ministry known as Department K. It is believed that they received a total of $53.2 million worth of BTC and ETH between March and October 2021.
According to reports, Department K is a cybercrime investigation unit that was looking into the activities of the BTC-e crypto exchange. The exchange’s founder, Alexander Vinnik, was arrested in Greece in 2017 on charges of fraud and money laundering. After his arrest, a Singapore-based firm called Wex took over the business operations of BTC-e, raising questions about the handling of customer funds.
It is alleged that Alexey Ivanov, an executive at Wex, offered the bribes to Satyukov and Sokolov in order to protect himself from a police investigation. The officials reportedly received a total of 2,200 BTC and over 10,000 ETH, which were transferred to cryptocurrency wallets held by Satyukov.
Following the exposure of the bribes, Satyukov and Sokolov fled the country and are believed to be residing in Dubai. They were arrested “in absentia” by Russian authorities. Ivanov, who was accused of embezzlement in 2023, agreed to provide information about the corruption in exchange for a pre-trial agreement.
If the allegations are true, this would be a new record for a bribery case in Russia. The previous record-holder was Colonel Dmitry Zakharchenko, another interior ministry official who was sentenced to 13 years in prison in 2019 for accepting a bribe worth almost $15 million.
The case highlights the misconception that cryptocurrency transactions cannot be traced, especially in Russia where there is a lack of clear regulations. Many corrupt officials in the country are said to actively use cryptocurrencies for illicit activities. However, experts argue that every transaction is traceable on blockchain networks, and law enforcement officers are gradually becoming more aware of this fact.
Russia’s inadequate regulation of virtual assets and cryptocurrencies has attracted criticism from international bodies like the Financial Action Task Force (FATF). The country’s compliance rating was downgraded due to its insufficient regulation of virtual assets. Politicians and central bankers have stated that they are working on a draft crypto regulation bill, but the process has been slow.
In a separate incident, anti-corruption officials in Ukraine recently announced that a lawmaker will stand trial for allegedly attempting to bribe a public official with Bitcoin.