According to own reports, Ukrainian civil servants hold bitcoins worth almost 2.5 billion euros. Is this just the tip of the iceberg, because cryptocurrency is already part of the corrupt system? Or are the numbers pure fantasy reports? It is possible that both are the case.
Did they really gained it by trading or investing? It is well known, that you either have to be very lucky, invest early or have a deep Cryptocurrency trading knowledge.
Government officials in Ukraine say they hold around 46,351 Bitcoins – nearly 2.5 billion euros. This is according to an analysis by OpenDataBot based on the mandatory declaration of property values submitted by nearly 800,000 Ukrainian state employees at the end of March.
Of those, only 652 officials declared bitcoins and other cryptocurrencies. The crypto holdings of Ukrainian officials consist of 61.1 percent Bitcoin, 24.2 percent Ether, 4.2 percent Litecoin, and the rest is shared by ADA, Stellar, Monero, MIOTA, and Bitcoin Cash in that exact order.
Most Bitcoiners are found in city councils, followed by the National Police, the Ministry of Defense, district councils, as well as the Attorney General’s Office. In the process, one comes across some whales with remarkably deep pockets. For example, Vyacheslav Dmitrovich Mishalov from the Dnipro City Council leads the list with 18,000 Bitcoins (950 million euros).
Mishalov is followed by:
- Peter Sergeevich Lensky, Ambassador of Ukraine to Vietnam (6528 Bitcoins),
- Alexander Igorevich Urbansky, deputy chairman of the Odessa City Council (5328 BTC),
- the People’s Deputy Anatoliy Ihorovych Urban (4256 BTC),
- the Director of Star Shine Shipping, Vladimir Valentinovich Krivosheya (3493 BTC).
- Dmitry Nikolayevich Pestruyev, member of the Odessa City Council (1318 BTC).
In addition to these whales with more than 1000 Bitcoin, the list includes nearly 20 other officials with 100 or more BTC. This sum is enormous – but possibly only the tip of the iceberg. After all, it’s hard to verify how complete the officials’ disclosures are, and the fact that with 652 officials less than one per thousand of the civil servants hold cryptocurrencies seems almost too little.
The most corrupt country in Europe
Where do these few but outstandingly large holdings come from? With a country like Ukraine, one is naturally inclined to guess corruption.
Ukraine is considered the most corrupt country in Europe, one of the most corrupt countries in the world. Among the population, paying bribes here and there is part of the norm; the political class is perceived as highly corrupt to kleptocratic, and newly elected presidents regularly step up to eradicate corruption but fail because of the system’s resistance. The obligation to disclose income and assets is, after all, a lasting success of this struggle.
The fact that there are several city councils among the whales is probably no coincidence. Both the port metropolis of Odessa and the industrial city of Dnipro are regarded as hotbeds of corruption, which extends all the way up to the mayors. The fact that, in addition to city councils, the National Police and the Prosecutor General’s Office report many Bitcoins could also point to a connection with corruption. Perhaps Bitcoin is used for bribes, and perhaps some of it comes from organized crime, perhaps smuggling. It would be nothing new for Eastern Europe: in Bulgaria, a network of smugglers bribing politicians with Bitcoins was already uncovered in 2017.
However, many officials in Ukraine, especially leading politicians, were already rich before their careers in government service, and the bribe money flows even without Bitcoin. So they had the financial basis to invest in Bitcoins and, with the sharp inflation of the Ukrainian hryvnia between 2009 and 2016, an apt legitimate motive to do so. For example, Alexander Urbansky of the Odessa City Council says he bought Bitcoins in 2009 for a dollar apiece. The rapid rise in the price since then explains the high value of Bitcoins – without any suspect business transactions at all.
Bitcoins as an excuse
However, the numbers may not be entirely true, as an insightful article from Coindesk explains. Vyacheslav Dmitrovich Mishalov of the Dnipro City Council, for example, now claims that he entered 18,000 Bitcoins by mistake because he got the line wrong. He does own Bitcoins, he says, “actually quite a few, but not that many, of course.”
Even anti-corruption campaigners like Alex Bornjakow, the deputy minister for digital transformation, doubt the high figures. Bornjakow suspects, for instance, that many officials declare high sums of cryptocurrencies in order to have a plausible explanation for why they suddenly enjoy incomes that far exceed the remuneration of their mandate.
Michael Chobanjan of Ukrainian crypto exchange Kuna also confirms this – crypto is often used by public servants to explain illegal income, he said. “They used to declare royalties through books. Now they just say that they sold some cryptos and so they can afford this villa in Italy.” In his opinion, 99.9 percent of the officials’ statements are fantasy figures.
Accordingly, Sergei Petukhov of the National Agency for Combating Corruption announces that his agency will closely scrutinize the declared assets. “We will see if the public servant really owns the specified crypto-tokens, if the money for the purchase was really transferred, and if the origin of the money spent on the tokens can be explained.”
So the crypto holdings of Ukrainian public servants raise more questions than they answer. But if even part of it is true, it shows how far Bitcoin has already eaten into the system. Banning cryptocurrencies is unlikely to work with politicians like Ukraine – which could be one reason why neighboring Russia now prohibits politicians from holding Bitcoins and other cryptocurrencies.
TIME magazine jumps on crypto bandwagon
The renowned TIME magazine cooperates with Grayscale for a Bitcoin info page. It will accept Bitcoins as payment – and will keep them. However, the publisher is currently putting more money into its coffers by auctioning off old cover images as NFTs.
It should be common knowledge by now that the media industry is in a medium crisis. The Internet has caused the loss of revenue from traditional newspaper sales; advertising cannot compensate for the loss, and online subscriptions are picking up somewhat, but are obviously not a real solution.
It is therefore urgent that publishers look for new business models. In the U.S., TIME magazine is leading the way there with two interesting forays. Keith A. Grossman, the president of TIME publishing, is getting involved with Bitcoin and crypto. Under him, TIME magazine is partnering with Grayscale, publisher of the eponymous cryptocurrency funds. Grayscale CEO Michael Sonnenshein tweeted:
I’m thrilled that Grayscale and TIME are working together to produce a new video series explaining Crypto-Space this summer. Just as importantly, Keith Grossman and TIME have agreed to be paid in Bitcoin – and will keep BTC on their balance sheet. As the first among our media partners.
With Keith Grossman retweeting the tweet, there should be no room for doubt that the news is true. The magazine already runs a page on Bitcoin on its website, which gathers various internal and external articles about Bitcoin and cryptocurrencies. So now it becomes the first major publisher to include Bitcoins on its balance sheet.
Similarly exciting, TIME has been auctioning off cover images of the magazine as NFT since late March. The auction on SuperRare began with three similarly designed cover images that printed a question on a black background in red lettering: “Is God dead?”, “Is truth dead?” and, most appealing to the crypto scene, “Is Fiat dead?“.
After TIME raised 241 ether – about 450,000 euros today – for these three NFTs, it uploaded another five historical covers from the ’50s and ’60s as NFTs. These also did well, earning the publisher a total of another 582 ethers. If TIME kept the Ether, the publisher would have taken in around 1.5 million euros today from a few old cover images. Media financing can be so simple – if you’re open to new things.