Estonia has been one of the early receivers of cryptocurrency licenses in the EU, but it did not save the Baltic nation from falling victim to ‘massive-scale’ crypto-related fraud and scams, according to an investigation report from international journalists.
Widespread Crypto Crimes in Estonia
A group of journalists reviewed close to 300 crypto firms registered in Estonia and discovered “dozens of crimes.” International crypto criminals have laundered or defrauded victims for more than €1 billion (1.05 billion), a recent report said. Crimes by Estonian crypto firms included “massive scale” fraud, money laundering, sanctions evasion, and illegal financing of crime groups and the Russian private army including the notorious paramilitary organization – Wagner Group.
- Dozens of crimes committed by Estonian crypto firms
- Massive-scale fraud, money laundering, sanctions evasion, and financing of crime groups
- Links with Russian banking giant Sberbank
According to the detailed investigation report published on an independent journalism portal VSquare, Estonia saw a mass inflow of crypto businesses over the last 5 years, with 55% of all crypto service providers in the world registered in Estonia as of mid-2021. The liberal crypto licensing and approvals have drawn international crypto platforms to promote themselves as EU-licensed financial services, it further said. However, the latest tightening of regulations in Estonia has stripped the licenses of many non-compliant companies. As a result, many firms moved to other Baltic neighboring nations. During the last six years, 1644 licensed cryptocurrency companies have operated in Estonia, journalists noted.
Questionable AML Practices and Military Group Links
Furthermore, many international crypto firms in Estonia used people with obvious financial difficulties and no experience in the field as anti-money laundering (AML) officers. These fraudulent crypto firms from the Baltic country had links to most infamous military groups in Russia, donating crypto assets worth hundreds of thousands of Euros. For instance, a now-defunct Russian darknet market Hydra received about 2,505 Bitcoins originating from Garantex exchange in Estonia between April 2021 and April 2022.
