The tempestuous winds of political upheaval recently swept across Russia’s financial landscape, causing a surprising surge in crypto trading.
Amid an attempted insurrection by the Wagner Group, led by Yevgeny Prigozhin, Russians scrambled to find a stable alternative to their plummeting currency.
The country’s first coup attempt in three decades shook the very foundations of Putin’s regime, and although it failed, the ramifications in the financial sector were felt far and wide. Below, we take a closer look at how the turbulence led to a sudden upswing in crypto trading.
Fleeing the Rouble: A surge in crypto trading
As the Wagner rebellion unfolded, crypto trading between the Russian rouble and the Tether stablecoin skyrocketed. It became evident that a significant portion of the population was turning to dollar-pegged cryptocurrencies.
Why? To seek refuge from the weakening rouble, which had lost around one-third of its value since December. On the day of the insurrection attempt, June 24, the trading volume of rouble to Tether’s coin surged to $14.7 million, a remarkable 277% increase from $3.9 million just 24 hours earlier.
This immediate reaction was not merely a random occurrence but rather a reflection of the public’s panic, seeking shelter in the relative safety of cryptocurrencies. Moreover, Russians withdrew over a billion dollars from local banks, revealing the extent of mistrust and fear within the economy.
These cryptocurrencies are viewed as an alternative store of value in economies heavily battered by sanctions. In Russia’s case, the dollar-pegged cryptocurrencies offered an escape route during the political unrest, a phenomenon also noted in other regions like Afghanistan when the Taliban took over.
Crypto’s dark side: The hidden world of illicit activities
The sharp increase in crypto trading also unveiled a darker aspect of digital finance. According to Charley Cooper, a former chief at the Commodity Futures Trading Commission, the rouble-Tether moves strongly suggest that crypto is a tool utilized by rogue elements trying to play outside mainstream finance.
This fear isn’t entirely unfounded, as North Korea has been accused of leveraging cryptocurrencies to finance its illicit ballistic weapons program.
Moreover, Russia’s connection to crypto exchange Bitzlato, described as a “crucial financial resource” to the dark net, has further tainted the image of digital currencies.
In addition, Wagner-affiliated paramilitary group Rusich has been identified as attempting to extort families by offering coordinates of deceased relatives in exchange for cryptocurrency.
This macabre transaction only adds to the complexities surrounding the surge in crypto trading during the rebellion.
The events in Russia have starkly illustrated the multifaceted role of crypto trading in modern economies. While cryptocurrencies have proven their worth as a haven in times of instability, their potential for misuse cannot be ignored.
As the country continues to grapple with its political challenges, the crypto landscape reflects the nation’s insecurities, strengths, and the murky world where finance and politics intertwine.
Though the saga of the Wagner rebellion may have ended, but the implications on crypto trading continue to resonate, echoing a global trend where technology and currency morph into instruments of rebellion, safety, and sometimes, sadly, criminality.