Corruption or a way to make money: why do Ukrainian officials invest in digital currencies?

Blockchain and cryptocurrency are inventions that, over time, will be able to bring the world economy to a new level and make it transparent. Many countries are already introducing their national cryptocurrency and introducing blockchain into government agencies. As for Ukraine, there are currently disputes over the status of cryptocurrencies in the country and the issue of creating a Ukrainian cryptohryvnia is being discussed.

Nevertheless, it seems that most Ukrainian officials have long ago decided everything for themselves and are actively buying Bitcoin and other cryptocurrencies. Moreover, some of them started doing this long before it rose in price. 

Financial analyst Mikhail Demkiv cites as an example a Citigroup study, which indicates that the size of the bitcoin market in Ukraine is $2.5 billion.

In early January of this year, the service Opendatabot  published a list of Ukrainian government officials who declared cryptocurrency, which includes 57 people. This, of course, is not the Forbes ranking of crypto billionaires, but the amounts appear to be quite impressive. 

The number of officials who declared Bitcoin is 28 people, other cryptocurrencies are 3 (OneCoin and Bitcoin Cash). The list also includes 11 people whose declarations mention Bitcoin, and it is unclear whether they declared Bitcoin or hryvnia. People's deputies (in particular, from the BPP) and officials living in Odessa and the Odessa region have the most cryptocurrency.

In first place is Dmitry Golubev, a deputy of the Verkhovna Rada of Ukraine from the BPP. In his tax return, the official indicated 4,376 military vehicles that were purchased back in 2012. It is worth noting that the official declared this amount in Bitcoin back in 2015. When asked how he received such a quantity of cryptocurrency, Golubev replied that, at one time, he made money by selling bitcoin. At the same time, the deputy believes that this is a legal way of earning money that should not be subject to taxes. On August 1 last year, Golubev additionally purchased cryptocurrency in the amount of UAH 32,804,684.

There are rumors that the deputy owns 50 thousand bitcoins, he simply stubbornly does not want to declare them. Golubev refuses to answer this question. By the way, his assistant, deputy of the Odessa City Council, Dmitry Palpatine (aka Dmitry Fisinchuk), owns 7 thousand bitcoins. But for some reason he is not on the Opendatabot list.

The second place is occupied by the head of the Odessa Regional Council of the 7th convocation, Anatoly Urbansky, who declared 4256.3278 BTC. Urbansky classified cryptocurrency as movable property and refused to answer questions about how he managed to collect such an impressive crypto capital...

In third place is Vladimir Krivosheya, commercial director of Odessa Star Shine Shipping LLC. He noted 3493 BTC in his declaration.

Ruslan Tabunshchik took fourth place and 1600 BTC, fifth place went to Valentin Volkanov (1500 BTC). Both are deputies of the Odessa Regional Council.

In 10th and 11th places, respectively, are deputies from the BPP Alexey Mushak (465 VTS) and Dmitry Belotserkovets (298 VTS). The first one said that he was engaged in mining and all the cryptocurrency “was acquired through honest and back-breaking labor.” Belotserkovets, like Urbansky, classified cryptocurrency as a movable asset and said that he has been interested in Bitcoin since 2013 and sees its huge potential in the future.

The last place on the list is the prosecutor from the Kharkov region, Vladislav Kochetov, who declared only 0.048 Bitcoin. 

It is worth noting that Dmitry Belotserkovets is an adviser to Mayor Vladimir Klitschko, who last year submitted a draft decision on the legalization of cryptocurrencies in Ukraine. Then 84 deputies voted “for” with the minimum required number of 61. Moreover, the Kyiv City Council actively advocates the release of the Ukrainian national cryptocurrency. This begs the question: does the Kiev mayor Klitschko, who is so actively patronizing the project, own digital assets? Whether this is true or not is unknown, since the official never declared it.

It is curious that the officials who declared OneCoin are connected with the education sector. Thus, Vasily Tyagur, with a capital of 5,400 OneCoin, holds the position of deputy director for academic work at the Humanities and Pedagogical College of Mukachevo State University, and Viktor Kucherenko, with €17,120 in OneCoin, is the director of Izyum Medical College.

As Opendatabot head Alexey Ivnankin notes, the analysis was difficult to carry out due to the fact that officials are required to provide a report either on the number of digital currencies, or on the price of them. What exactly some of them had in mind is unclear.

One thing is clear: officials are seriously interested in cryptocurrencies and everything connected with them. At the same time, it is not clear what caused this interest: the opportunity to increase capital or hide one’s income..

Sergey Mitkalik, executive director of the Anti-Corruption Headquarters NGO, believes that the fact of buying cryptocurrency by Ukrainian officials is a direct path to increasing corruption. He argues that it is not a problem to indicate cryptocurrency in the declaration, but in fact, no one can verify this. If questions arise about what funds were used to purchase it, you can always answer something like “I bought it a long time ago and at a different exchange rate,” which is what the leaders of the Opendatabot list do.

The problem with Ukraine at the moment is that the National Bank does not recognize Bitcoin as a virtual currency, and the lack of legal regulation increases the risk of financial abuse.