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Bomb threats at railway stations and a mine in a former aluminum factory

Palace Bridge in St. Petersburg. Picture of kuhnmi via flickr.com. License: Creative Commons

Colorful news from Russia: An adviser to the Russian government is building a crypto-mine in a former aluminum plant near the border with Finland, which will in the future Meanwhile, a blackmailer with a bomb threat spreads to stations in St. Petersburg terror. As a ransom he wants, of course, Bitcoins. And finally, the Home Office discusses how to confiscate cryptocurrencies.

On November 2, a railway station of the Russian Railways in St. Petersburg received an anonymous e-mail with a terrible threat: The sender announced that he would use a quadrocopter to blow up stations and stations from 5 November, unless the station pay a protection fee of 43 Bitcoin, what about 30 million rubles or 264. 000 Euro equals. The railway workers immediately forwarded the letter to the St. Petersburg police. They checked five stations and

Today is the 7th of November, and there is no news from exploded railway stations in St. Petersburg. If the railroad did not pay, it might have been an empty threat. Of course, the station is still looking for the transmitter from St. Petersburg. The e-mail came from “a real address in Rostov-on-Don” belonging to a telecommunications company, eventually, according to the article, the address was hacked. If the sender did not make a fatal mistake, it might not be possible to track him down.

Digital threats are mostly risk-free in most cases, while there is a (small) chance that the other will pay. Because the balance of risk and reward is favorable, such blackmail attempts are quite common in today’s Internet. There was a wave of death threats where an alleged killer arbitrarily wrote down people, claiming he was being paid to murder them; only if the victim pays more than the client does it stay alive. Sextortion, especially mails, claiming to have filmed the recipient of filthy pornography, and demands that a hush money be paid in Bitcoin. Also food poisoning and parcel bombs at a Christmas market already existed, both in Germany.

The case from St. Petersburg is nothing new in itself. The threat is only a bit crass.

The problem with the missing legalization

At the same time there are other interesting developments in Russia. The Ministry of the Interior is currently planning to introduce mechanisms to confiscate cryptocurrencies. This is necessary as there is a steady increase in virtual asset offenses, such as the ransom demands of hackers slipping into corporate systems.

So far, it has been problematic to seize cryptocurrencies for several reasons. For one thing, because they are legally in a gray area in Russia. They are neither recognized as commodities nor as cash equivalents. Such recognition would be necessary to enforce seizures, but it is apparently being prevented by the Russian central bank. Also technically it is a challenge. Bitcoins and other digital coins and tokens are often stored on their own wallet, for which only the owner has the keys. Confiscation is only possible if there is physical access to the person. On the other hand, if the coins are on a stock exchange, the authorities can send a request to them to block accounts. However, this is only effective if the stock exchange recognizes Russian jurisdiction. Stock exchanges, for example from Singapore, can ignore the request. Again, the regulatory uncertainty takes its toll – there is virtually no big stock market in Russia.

These questions will be discussed by the Ministry of the Interior and other authorities over the coming years. There is apparently no hurry, until the

Mining Bitcoin with excess power

The Russian state, on the other hand, is in a hurry to become an actor in the bitcoin market itself. Dmitrij Marinichew, the Russian Internet Ombudsman and a technology consultant to Vladimir Putin, is converting a former aluminum factory in Karelia, on the border with Finland, into a massive crypto-mine. The executing force of the project is the “Russian Mining Company” RMC, which was co-founded by Marinichew.

RMC is interesting. The company is releasing a Russian Miner Coin (RMC) to invest in Russian miners with Bitcoin and Ether. The ICO from RMC ended on September after more than two years, bringing RMC 180 millions of dollars. The company manufactures its own Asic miners and initially gemined in a former Moscow vehicle factory, but this was due to the relatively high Moscow electricity prices unprofitable, as the prices for crypto currencies fell.

Now the next mine is to be created in the former molten aluminum. The power plant had to close, according to RBC.ru, because sanctions made it impossible to sell the products in the US. In the immediate vicinity of the now milled aluminum plant, however, is a power plant, which has since produced a considerable Übrschuss. This will soon flow into the mining of cryptocurrencies. While Marinichew targets a share of 11 percent of global bitcoin mining, Yuri Pripachkin, the president of the Russian Federation, announces for crypto-economics and blockchain, more cautious predictions: he says that 5-7 percent would be more realistic.

Can you consider the RMC mine as a Russian state project? Presumably, it is rather a private initiative of Dimitrij Marinichew, for whom it was certainly helpful that he also has good relations in the high politics. Nevertheless, the mine will operate in close liaison with the Russian government. Like China, Russia is trying to gain a share in the emerging crypto markets, much more openly than the EU.