The cryptocurrency exchange SUEX was included in the Washington sanctions list for illegal money transactions in the third quarter of 2021. Such restrictions are a precedent that threatens the collapse of other cryptocurrency companies. According to the US Treasury Department, “crypto-money launderers” carried out illegal payments for Hydra (the largest drug trading platform) and legalized the income of hackers and cybercriminals.
Maxim Kurbangaleev shares the nuances of the cryptocurrency business and explains what needs to be done to avoid being blacklisted like SUEX.
Nuances of the cryptocurrency business – Maxim Kurbangaleev
“To begin with, I will state the difference between the standard currency exchange in fiat and crypto exchange. In a standard currency exchange, all procedures have already been completed and agreed upon. Unfortunately, there is no such order in cryptocurrency payments. Today we are at the point where the market is coming to understand the need for regulatory standards and complying with them. Simply put, the cryptocurrency world recognizes that it is necessary to establish the “rules of the game” and this is an absolutely normal process that happens in all markets,” Maxim Kurbangaleev says.
Cryptocurrency regulations are being actively developed around the world. A representative of the Washington administration in March 2022 said that the US Treasury would continue to actively combat the illegal use of cryptocurrencies especially to circumvent sanctions measures in certain countries. The representative also added that insufficient supervision over cryptocurrencies allowed criminal and terrorist organizations to launder money. For this reason, in the fall of 2021, SUEX fell under US sanctions.
Cryptocurrencies became the object of close attention of regulators only a few years ago, when the level of fraud and crime reached global proportions, and the total volume of cryptocurrency transactions increased to $ 16 trillion. It is worth noting that by the end of 2021, China’s GDP amounted to $16.9 trillion, which makes the volume of cryptocurrency transactions comparable to the second economy in the world. Almost every 10th adult in the world owns cryptocurrency assets, and the number of cryptocurrency exchanges has exceeded two hundred. What current problems do we have in the world of cryptocurrencies now?
“There is a layer of problems in cryptocurrency transactions that gathers a large bureaucratic apparatus around itself. This affects the increase in the cost of fees for transfers. In my opinion, this is a problem for the entire industry, regardless of which jurisdiction the cryptocurrency license was obtained in. For example, a business receives a license in the United Arab Emirates, and works, relatively speaking, with European companies – in this case, the company needs to comply with the norms of European legislation. It is necessary to develop common standards, as it was in the banking sector,” Maxim Kurbangaleev emphasizes.
What happened to SUEX? – Maxim Kurbangaleev
“The cryptocurrency exchange SUEX was launched in a market when there were no rules and regulations. Regulators were just beginning to show interest, but did not yet know how to control the chaotic cryptocurrency world. I assume that SUEX worked without an AML policy for a long time and therefore could not track fraudulent transactions. This was the impetus for the collapse of the business,” Maxim Kurbangaleev believes.
Conducting AML checks in the company is a mandatory stage of working with the client and the market. Without client verification and database checks (fraudulent, terrorist, and others), a business can easily find itself “drawn into the game” of criminals against its will. The introduction of an AML policy may not be cheap for a company, but the invested funds are justified and will help the business avoid the “SUEX path”.
“In addition to the AML policy, to track the “purity” of the cryptocurrency, it is necessary to use blockchain analysis tools (Chainalysis, etc.). One should not neglect AML and KYC. They will help to recognize money laundering schemes and identify suspicious transactions. Cryptocurrency companies that comply with all legal norms have a much better chance of not being blacklisted and not repeating the fate of SUEX,” Maxim Kurbangaleev sums up.
Disclaimer. Maxim Kurbangaleev, the CPO of Ibisse FZC-LLC has no relation to SUEX and its activities. All said is a personal expert evaluation of SUEX case, as a significant stage of crypto-industry development in favor of market legalization. The data for the analysis was taken from public sources.
