In a surprising turn of events, Russian banker Mikhail Klyukin recently sold over £15m worth of shares in UK-based cryptocurrency firm, Copper Technologies. This sale has raised eyebrows not only due to the involvement of a sanctioned individual but also because of the potential evasion of sanctions and increased scrutiny on cryptocurrency transactions. The role played by Copper Technologies, chaired by former Chancellor Philip Hammond, has also come under question, sparking concerns about the transparency of the deal.
The Background Story
Mikhail Klyukin, who held a 2% stake in Copper Technologies, was sanctioned by the UK Foreign Office for his links with Sovcombank, a Russian lender closely associated with the Putin regime. These sanctions were part of the US response to the Russian invasion of Ukraine, targeting individuals believed to be benefiting from or supporting the Kremlin’s actions.
The Role of Copper Technologies
Copper Technologies, a London-based company with a subsidiary in New York, played a significant role in facilitating the sale of the shares. As a company known for building and managing digital systems for digital asset investments and trades, it acted as an intermediary in this particular transaction. The company converted the buyer’s payment in sterling into cryptocurrency before transferring it to Klyukin, effectively enabling the sale to take place.
Legal Concerns
Legal experts have raised valid concerns regarding this transaction, particularly with regards to the potential evasion of US sanctions. The US is known for its strict enforcement of sanctions, prohibiting any financial dealings with sanctioned individuals involving US currency or American citizens. However, since this sale utilized non-US currency and non-American entities, it has created a legal gray area. Furthermore, the inclusion of cryptocurrency as a means of transferring funds adds another layer of complexity.
Potential Violation of US Executive Order
President Joe Biden issued an executive order in April 2021 that explicitly prohibited deceptive transactions designed to evade US sanctions, including those involving digital currencies. Therefore, the use of cryptocurrency in this deal could potentially be seen as a violation of this order.
Copper Technologies has maintained that its actions were legal and compliant with all applicable sanctions laws based on expert legal advice. The company has emphasized its commitment to anti-money laundering rules, regulatory guidelines, and sanctions laws. It stated that the purpose of the transaction was to sell shares owned by a firm linked to a sanctioned individual. Copper Technologies conducted a thorough review of the potential consequences of this action and sought advice from external legal experts specializing in sanctions. Based on their findings, they determined that the transaction adhered to all relevant sanction laws.
Associates of Klyukin have also confirmed that his businesses have complied with US sanctions, including in the context of this share sale. This confirmation adds weight to Copper Technologies’ argument that the transaction was within legal boundaries.
Philip Hammond’s Involvement
Philip Hammond, who became the chair of Copper Technologies in January 2023, reportedly had no knowledge of the share sale at the time. He was informed about it during a later review of major shareholders. Hammond’s involvement in the transaction has raised questions about his level of oversight.
The sale of Copper Technologies shares by Mikhail Klyukin has undoubtedly sparked controversy and raised concerns about the transparency and legality of the transaction. The use of cryptocurrency and the involvement of a sanctioned individual have added complexity to the situation. While Copper Technologies maintains that it acted within the bounds of applicable sanction laws, it remains to be seen whether any further investigations or legal actions will be taken regarding this sale.
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