Georgia seizes over $700K in cash, detains Russian nationals over crypto crimes

Georgian authorities have detained five Russian citizens accused of operating an illegal cryptocurrency business and money laundering scheme.

The Russians are also suspected of smuggling large sums of foreign cash into the Caucasian nation, hidden in a vehicle to avoid border control.

Russian crypto criminals apprehended in Georgia

The five individuals, all holding Russian passports, have been arrested in an operation conducted by the Investigation Service of the Georgian Ministry of Finance, in coordination with the country’s Prosecutor General’s Office, local and Russian media reported.

The agencies established that the Russians used a domestic company to provide unlicensed digital asset services through both a physical office and an illegal “courier” service.

The entity was not registered with or authorized by the National Bank of Georgia, as required by law, the investigative body said in a statement on Thursday, elaborating:

“Over the past several months, the company carried out virtual asset transactions worth hundreds of millions of GEL, thereby engaging in the execution of uncontrolled international transactions within the country.”

According to current exchange rates, 100 million Georgian lari (GEL) is approximately $37 million, the English-language publication Moscow Times noted in an article.

Law enforcement officials also found the Russian nationals transferred large amounts of foreign currency into Georgia by car, bypassing border controls.

The money was subsequently used to purchase cryptocurrencies, laundering the cash, the Georgian public broadcaster 1TV explained in a report.

Despite the massive scale of the illicit activities, neither the crypto firm nor the persons involved made any payments to the state budget, Georgian authorities emphasized.

Georgian government seizes over $700,000 in cash

During searches at various locations in the capital Tbilisi, Georgian authorities seized $371,000, accounting records, other documentation, and computer hardware, the finance ministry’s press release detailed.

Another $100,000 intended for the purchase of digital coins was confiscated from one of the implicated individuals, and $250,000 was found in vehicles with Russian license plates, bringing the total of seized funds to $721,000.

The Russian citizens who organized the illegal crypto scheme may face prison sentences of up to 12 years, in accordance with several articles of Georgia’s Criminal Code, the Georgian Treasury noted, adding:

“Relevant measures are being taken within the investigation in order to identify and expose other individuals involved in the above-mentioned crime, and to establish additional facts of tax evasion and possible legalization of illegal income.”

The department’s investigation service also vowed to “continue to implement a strict criminal justice policy against crimes committed in the financial-economic sphere.”

The Russian Interests Section at the Swiss Embassy in Georgia, serving as the de facto embassy of Russia in the country since the 2008 war between the two former Soviet states, is yet to officially comment on the arrests.

Current Georgian regulations permit both the owning and trading of cryptocurrencies. With few exceptions, capital gains of individual traders are exempt from income tax.

The favorable taxation policy, which has been in place since 2019, has turned the South Caucasian nation into an attractive destination for private crypto investors.

The country is a major regional hub for cryptocurrency mining as well, boasting low-cost energy generated mainly by hydroelectric power plants.

In March of this year, local media revealed that an aide to former Georgian Prime Minister Bidzina Ivanishvili had fled the country amid crypto-related allegations. George Bachiashvili chose to leave Georgia to evade prosecution over alleged embezzlement of funds obtained from a Bitcoin mining investment, as reported by Cryptopolitan.

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