The Controversial Share Sale: Questions Raised About Cryptocurrency, Sanctions, and Transparency

The Controversial Share Sale: Questions Raised About Cryptocurrency, Sanctions, and Transparency

In March 2022, Mikhail Klyukin, a Russian banker under White House sanctions, made headlines when he sold over £15m in shares of UK-based cryptocurrency firm Copper Technologies. The involvement of Copper Technologies, chaired by former Chancellor Philip Hammond, in this transaction has sparked concerns about the transparency of cryptocurrency transactions and the potential evasion of sanctions. This article delves into the intricacies of the share sale and the legal implications surrounding it.

Copper Technologies, a London-based company with a subsidiary in New York, played a pivotal role in facilitating the sale of shares. The company specializes in building and managing digital systems for digital asset investments and trades. In this case, Copper Technologies acted as an intermediary, converting the buyer’s payment in sterling into cryptocurrency before transferring it to Klyukin. However, this transaction has raised significant legal concerns.

One of the main concerns regarding the share sale is its potential to evade U.S. sanctions. Mikhail Klyukin was sanctioned by both the UK and the U.S. due to his involvement with Sovcombank, a Russian lender linked to the Putin regime. The U.S. has strict measures in place that prohibit financial dealings with sanctioned individuals, particularly those involving dollars or American citizens. However, the transaction managed to exist in a legal gray area by leveraging non-U.S. currency and non-American entities.

The use of cryptocurrency in this share sale adds an additional layer of complexity. In April 2021, U.S. President Joe Biden issued an executive order explicitly prohibiting deceptive transactions designed to evade U.S. sanctions, including those involving digital currencies. Thus, the utilization of cryptocurrency in this deal could potentially be seen as a violation of this order. The involvement of digital assets has further raised concerns about the true nature of the transaction.

Copper Technologies has maintained that the share sale adhered to all applicable sanctions laws based on external legal advice. The company emphasizes its commitment to anti-money laundering rules, regulatory guidelines, and sanctions laws. They claim that the purpose of the transaction was to sell shares owned by a firm linked to a sanctioned individual. Furthermore, Copper Technologies sought advice from external legal experts specializing in sanctions to review the potential consequences of the action. Associates of Klyukin have also confirmed compliance with U.S. sanctions in the context of the share sale.

Philip Hammond, who became the chair of Copper Technologies in January 2023 but served as an advisor during the share sale, was reportedly unaware of the transaction at the time. He only became aware of the share sale during a subsequent review of major shareholders. Hammond’s involvement raises questions about due diligence and oversight within the company. As a former Chancellor, his association with Copper Technologies further underscores the need for transparency in such transactions.

The controversial share sale involving Mikhail Klyukin and Copper Technologies has raised significant concerns about the transparency, legality, and potential evasion of sanctions through the utilization of cryptocurrency. The transaction operates in a legal gray area, leveraging non-U.S. currency and non-American entities, leaving room for interpretation regarding its compliance with U.S. sanctions. Despite Copper Technologies’ assurance of legal compliance and its consultations with external legal experts, the share sale has sparked debate about the effectiveness of existing regulations and the need for greater transparency in cryptocurrency transactions. As the global financial landscape continues to evolve, it is crucial for regulators and industry players to address these challenges and find appropriate solutions to ensure the integrity of financial systems.

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