Estonia has allegedly become a safe haven for international crypto criminals. The northernmost Baltic state was the first European Union member to regulate cryptocurrency trade. In 2017, the country set a course for the digital transformation of its economy and launched a licensing system for crypto companies, attracting many start-ups and fintech firms.
Last year, though, Estonia cranked up crypto-related regulation in response to TerraUSD stablecoin – the third largest cryptocurrency ecosystem – and its sister token Luna collapse. Before the regulatory U-turn, Estonia, with a population of about 1.3 million, had been home to over half of the world’s registered VASPs (virtual asset service providers).
Notwithstanding the ramped-up regulations, Estonia remains an inviting place for shady crypto businesses and dummy companies. According to a story run by VSquare.com, a good deal of crypto firms registered in the Baltic country are engaged in money laundering, massive-scale fraud, sanctions evasion, and illegal financing of crime groups and Russian army, including Wagner Group, a notorious paramilitary organization.
The claims have been backed by an investigation conducted by an international team of journalists from a number of media outlets, including Delfi (Estonia), Siena.lt (Lithuania), Frontstory.pl (Poland), Paper Trail Media, Der Spiegel and ZDF (Germany), and Der Standard (Austria). Reporters analyzed nearly 300 companies and discovered dozens of cases of criminal activity. In many cases, AML officers and managers of the audited companies were straw men with little to no relevant competence, such as taxi drivers, welders, or people on social welfare.
“Usually, I was just a shell; I didn’t work with the transactions. I didn’t know what kind of millions went through there,” said Sergei Bezrodny, an unemployed plumber from Tartu, quoted in the report. Company owners created a fake LinkedIn profile for Bezrodny, falsely crediting him with 20 years of experience in finance and banking,
Another interesting piece of information is the fact that eight of the analyzed crypto companies are related to a single address in Tallinn, Paagi St. 10, a social accommodation building for underprivileged people. The place is owned by the city government. For more details on the investigation, check the original story at VSquare.org.