The Russian branch of Transparency International, an anti-corruption NGO, has found at least eight over-the-counter (OTC) brokers in Moscow that offer to sell tens of thousands of dollars worth of stablecoins, such as Tether (USDT), for cash.
Despite the efforts of the US and European countries to cut off most Russian banks from the global financial system, the flow of money between Russia and the West continues.
The researchers focused on the UK because it is a popular destination for Russian money, including investments from Russian firms and savings from Russian oligarchs.
In response to Russia’s invasion of Ukraine in 2022, the U.S. and European countries took steps to disconnect Russia from the global financial system in order to reduce its ability to finance the invasion.
One of the main measures taken was to restrict the majority of Russian banks from accessing the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the international inter-bank money transfer system.
According to Banki.ru, a Russian financial news website, a limited number of Russian banks are still able to make currency transfers through the SWIFT system. However, the largest banks in the country are not included in this list.
Transactions made by the banks with access to the global system are frequently subject to delays and additional checks from foreign banks, which can last for several months.
Additionally, last fall, the European Union prohibited Russian citizens from using crypto services in Europe.
How Tether helps move money
Despite most Russian banks being cut off from SWIFT and the European Union banning Russian citizens from European crypto services, there are still ways to move large sums of money across borders without declaring them at customs control.
For instance, individuals can purchase USDT for cash in Moscow and then sell it for cash in London, all without registration, identity verification, or licenses.
According to the report, the first step is to buy USDT in Moscow, with eight OTC brokers found that will process over $10,000 in crypto.
Transparency International’s Russian branch found eight such brokers, including Pridechange, Bitokk, Alfa.exchange, Finex24, Mychange, 24ExPay, Trust-exchange, and the sanctioned Suex.
The buyer then finds OTCs that offer to buy their USDT for pounds sterling in the UK, with a commission of between 1% and 3% and same-day delivery in an agreed location in London. No ID is required, with couriers sometimes asking for a photo of a banknote with a serial number and a description of the client’s clothing to recognize them.
According to Transparency’s calculations, the most active of the 15 crypto wallets belonging to these OTC firms receive and send out between $420,000 and $470,000 a month. These wallets mostly send funds to several crypto exchanges, including Huobi, Binance, and Russian exchanges MEXC and Garantex.
While these transactions carry risks, as clients must trust anonymous counterparts behind Telegram nicknames, as the seller sends crypto first and receives cash hours later, Transparency International’s investigation highlights the limitations of political sanctions in stopping the flow of unidentified funds completely.
Transparency International uncovers OTC brokers
Transparency discovered that Trust-exchange is a OTC provider that exchanges USDT for euros in Prague, Czech Republic. The USDT wallet provided by Trust-exchange has processed more than $3.7 million since April.
Alfa.exchange offers a wide array of cash deal options and has processed over $1.8 million in USDT since October. The firm’s website states that users can sell USDT for cash in various cities across Russia, the U.S., and Europe. When asked about a delivery location in London, Alfa.exchange suggested meeting a courier in the Norbury area at a local gym.
Other OTCs offering pound sterling cashouts include 24ExPay, which has processed over $7.2 million USDT through its USDT wallet since September 2021, and Pridechange, which has received and sent over $3.7 million since its first transaction in April 2022.
In conclusion, the use of Tether in this manner demonstrates the resilience and versatility of cryptocurrencies, as well as their potential to bypass traditional financial systems and international sanctions.
