Russian Central Bank warns against using Bitcoin

Russia28 Jan 2014 / RT – Russia’s top financial regulator is warning citizens against using virtual currencies, as they could be tied to gangs into money laundering and terrorist financing. The Central Bank warning follows bans by China and Europe on “dubious” cryptocurrencies.

The Russian Central Bank (CBR) issued a statement late Monday warning that virtual currencies, or “money surrogates” are illegal under Article 27 of the Federal Law “On the Central Bank of the Russian Federation”.

Bitcoin is an independent currency, not regulated by a government, and therefore “carries a high risk in devaluation”.

Due to the anonymous nature of virtual currencies, the bank warns Russians, either knowingly or not, “may become involved, including unintentionally, in illegal activity such as the legalization (laundering) of criminal gains and financing terrorism,” the statement said.

China and Denmark have banned virtual currency deposits, and now Russia has warned against virtual currencies, which in their anonymity can be used as a smokescreen for internet users to buy drugs, firearms, or other illegal services.

On Monday Robert Faiella and Charlie Shrem were arrested and charged in connection with their alleged role in using the Silk Road website, which has been linked to illegal activity, as a means to launder money through bitcoins. The two face a maximum of 25 years in prison, on charges of conspiracy to commit money laundering and operate an unlicensed money transmitting business.

In the US, the FBI shut down the Silk Road website which was offering illegal drugs for sale. Nearly $28.5 million was confiscated in the sting. In China, some bitcoin exchanges have disappeared overnight, and there are dozens of other stories of millions of lost bitcoins.

Economics Nobel Laureate Robert Shiller also strongly criticized bitcoin at the World Economic Forum in Davos last week, calling it “an amazing example of a bubble”.….. Read more

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