Ukrainian Government Official Charged with Illegal Bitcoin Mining Operation

Investigators have cracked down on another illegal cryptocurrency operation in Ukraine, with a government official amid the storm.

Earlier this week, the official Facebook page of the Kyiv Prosecutor’s Office announced that it had begun a sweeping investigation into the activities of an unnamed staff member. The investigation, which will be conducted in line with the State Bureau of Investigation, comes in light of allegations that this staff member used the office computers to illegally mine cryptocurrencies.

Suspect Was Abusing Executive Privilege 

According to the Facebook post, the individual was an information technology specialist at the office and also held executive positions in the State Judicial Information Systems for a while. The individual allegedly engaged in the illegal use of the office’s network equipment to spread malware across the machines and use their computing power to mine crypto.

The defendant also allegedly tried to profit off his access to the office’s systems by providing access to third parties in exchange for a small fee. According to the Prosecutor’s Office, up to three online stores and a resource for Chopper motorcycle enthusiasts had been using their computers to mine cryptocurrencies from as far back as August 2018.

The Prosecutor’s Office has now opened charges of illegal interference with the operation of computers, as well as the distribution of malware. Although the Prosecutor’s Office didn’t disclose the nature of the mining operation (including the type of cryptos mined or how much was mined), it did confirm that if found guilty, he could face up to 6 years in prison. Like many countries in Eastern Europe and the former Soviet Union, Ukraine has had many problems with illegal crypto mining. With a relative abundance of energy and expansive government resource count, several in the country have tried to capitalize and use resources to mine cryptos. 

Last August, UNIAN reported that the Security Service of Ukraine (SBU), Ukraine’s top counterintelligence and law enforcement agency, cracked down on an illegal crypto mining operation in the country. The miners had worked at a nuclear power plant facility located in Yuzhnoukrainsk, and as the report confirmed, their work had compromised the security of the nuclear plant by connecting its computers to the Internet.  

Time to Keep the Industry in Check  

Regardless, the Ukrainian government has employed a progressive stance on regulating crypto mining. Earlier this month, the country’s Ministry and Committee of Digital Transformation published its guidance on regulatory policies, in which it confirmed that it would be leaving the industry to regulate itself. 

Regulators showed their belief that Bitcoin and its consensus protocol rules are enough to regulate on-chain activities, since network users and node protocols band together to enforce rules. Thus, the government won’t need to ensure any oversight or intervention. 

Authorities also explained that the presence of open-source protocols would help Bitcoin to self-regulate, while open network access will see to privacy and easy asset movement. In the absence of any oversight functions, the authorities explained that they would focus on building enabling policies in areas such as digitization, digital innovation, and the development of an information-driven society.