Crypto firms in Dubai are being bombarded with billion-dollar liquidation requests from Russians seeking financial sanctuary for their wealth.
Some wealthy Russians are buying up property in the United Arab Emirates (UAE), while others want to draw cash to invest it elsewhere. One crypto firm has been inundated with requests from Swiss brokers to liquidate holdings worth $2 billion and above.
“We’ve had like five or six in the past two weeks. None of them have come off yet – they’ve sort of fallen over at the last minute, which is not rare, but we’ve never had this much interest,” said an executive, adding that they had one request from a Swiss broker to sell 125,000 bitcoin ($6 billion USD) for a client.
Switzerland’s economic affairs secretariat (SECO) said that the crypto assets are subject to the same sanctions and restrictions placed on the other assets owned by sanctioned individuals. Dubai’s current stance on the Russia-Ukraine conflict, which began on Feb. 24, 2022, is a neutral one, indicating to the Russians that their money is safe in Dubai, an attractive location for the super-rich.
A real-estate broker said, “we’ve been seeing a lot of Russians and even Belarusians coming to Dubai and bringing whatever they can bring, even in crypto.”
Exchanges are complicit with sanctions
A source told Reuters that Russians were using crypto to buy property in Dubai to move their assets from sanction-imposing jurisdictions.
Crypto exchanges Binance and Coinbase have said that they would block the accounts of sanctioned Russians to ensure that the crypto accounts are not used to evade sanctions imposed by Western powers. They also said they would collaborate with law enforcement on the issue.
Western diplomats raise concern over Dubai’s passivity
Three diplomats from the west said they were growing alarmed at the number of Russians seeking financial refuge in the UAE and indicated concern that some could be acting on behalf of those under sanctions. Two diplomats said they are doubtful that Dubai would crackdown on Russian money due to its neutral position on the Russian invasion of Ukraine.
At the same time, another hoped that the UAE would come to terms with potential reputational damage that it may sustain and adopt stricter measures.
Dubai’s pedigree as a holiday destination has attracted many Russian visitors and property buyers, both before and during the war.
“They’re basically trying to protect themselves against the inflationary pressures that are happening against the Russian currency. So crypto has been a very good exit for them to manage the risks that they’re facing,” says Apurv Trivedi from Healy Consultants.
In March 2022, the Financial Action Task Force placed the UAE on a “grey list,” joining countries that will be under greater scrutiny by the watchdog because of financial crime and money laundering potential.
The UAE has a virtual asset regulator that has sought advisory information on money laundering.
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