LHV Bank founder has $470M worth of Ether, but lost his private key

November 7, 2023 Coin Telegraph

LHV Bank founder has 0M worth of Ether, but lost his private key

Rain Lõhmus, the founder of LHV Bank told Estonian media last month he’s not made much effort to recover the funds, but is willing to pay someone who can.

The founder of Estonia-based LHV Bank, Rain Lõhmus, has been revealed as the owner of a massive 250,000 Ether (ETH) stash bought during the Ethereum ICO, which is now worth an eye-watering $470 million.

There's only one problem. He no longer has the keys.

In February, Coinbase director Conor Grogan highlighted a Ethereum whale wallet containing some $470 million worth of ETH, untouched since the blockchain’s genesis.

In an Nov. 6 update on X (Twitter), Conor highlighted Lõhmus’ comments in a recent interview that now tie him to the $470 million worth of trapped ETH.

“One mystery solved,” wrote Grogan who shared an excerpt of an Oct. 31 ERR News report on an earlier Vikerraadio interview with Lõhmus.

One mystery solved: This address (which now holds $450M of crypto) belongs to Rain Lohmus, founder of LHV Bank

Unfortunately he lost his keys and can't access these 100s of millions. If you can help him recover them somehow, he's willing to split them with you https://t.co/wYLAU9gKzb pic.twitter.com/0A1nIjFSyn
— Conor (@jconorgrogan) November 6, 2023

“Unfortunately he lost his keys and can't access these 100s of millions. If you can help him recover them somehow, he's willing to split them with you,” Grogan added.

According to ERR’s report, Lõhmus said it was “no secret” he owned a wallet with 250,000 ETH which he lost the password to and hasn’t made much effort to recover.

“I can't solve this alone; if someone thinks they can, I'll take all offers,” Lõhmus said.

“It's very common for me to lose passwords,” he said, adding that losing access to funds was a “weak point” of blockchain systems.

In total, Lõhmus’ Ether purchase was $75,000 as ETH’s price at launch was around 30 cents.

At Ether’s Nov. 10, 2021, price peak of nearly $4,900 — Lõhmus stuck stash was worth $1.22 billion.

Lõhmus’ wallet today still has an impressive 628,757% gain and according to Grogan’s February X post had $6.5 million worth of airdrops to boot.

Magazine: Slumdog billionaire — Incredible rags-to-riches tale of Polygon’s Sandeep Nailwal

Crypto firm claiming $1.4B in trades on CMC flashes reportedly fake license data

September 26, 2023 Coin Telegraph

Crypto firm claiming .4B in trades on CMC flashes reportedly fake license data

Bitcoin Scams

A crypto exchange claiming $1.7 billion in daily trades and reporting $1.4 billion of daily trading volume on CoinMarketCap had reportedly displayed false license data until Estonian regulators checked it.

A number of cryptocurrency platforms reporting billions of dollars in daily trades on CoinMarketCap appear to have been misleading their customers about holding certain crypto licenses, an investigation by Cointelegraph has found.

Bitspay, a crypto exchange that reports a $1.4 billion daily trading volume on CoinMarketCap, claimed it held a license in Estonia, and is regulated under Estonian law. However, after Cointelegraph reached out with questions about this license, the company swiftly erased its reportedly fake license data.

At the time of writing, Bitspay is the fourth-largest crypto exchange by daily trading volume on CoinMarketCap, following platforms like Binance, BitForex and Topcredit International.

*Top four crypto exchanges by daily trading volume. Source: CoinMarketCap*

According to Bitspay’s page on CoinMarketCap, it is a centralized exchange (CEX) based in Estonia. The exchange was launched in 2020 and claims to be regulated under the Estonian “Anti Money Laundering Counter-Terrorism Financing Act 2019,” which appears to be referring to the country’s Money Laundering and Terrorist Financing Prevention Act.

*Bitspay’s info on CoinMarketCap. Source: CoinMarketCap*

Bitspay also claimed it was licensed and regulated by Estonia’s Financial Intelligence Unit (FIU). “Bitspay Limited registered with the registration number FVR000796, under the Laws of the Republic of Estonia,” the firm stated on one of its domains, Bitspay.io, until it erased the information immediately following Cointelegraph’s inquiries.

*Bitspay claiming to have a license in Estonia on Bitspay.io. Source: Wayback Machine*

Contacted by Cointelegraph, Estonia’s FIU reported that Bitspay didn’t hold any valid license in Estonia. “We took a look into it, and it seems that the license number which they have previously announced refers to an Estonian company, Globe Assets OÜ,” a spokesperson for the FIU said in a statement on Sept. 21. The license was also valid for less than a year, from March 2019 until January 2020, the representative noted.

The FIU didn’t respond to additional questions about Bitspay’s legal status in Estonia.

Bitspay was showing its website visitors information on the license mentioned above until at least Sept. 18, 2023. The firm subsequently rebranded its website from the briefly unavailable Bitspay.io to Bitspay.global on Sept. 21, removing all data about being registered or regulated in Estonia.

At the time of writing, Bitspay has not provided any information about its registration or license on its new website. The exchange also claims on its website that its daily trading volume amounts to 65,249 Bitcoin (BTC), or $1.7 billion. Despite reporting that much in trading, the exchange appears to have no more than around 400 subscribers on Twitter and some 16,000 members on its Telegram channel.

Kelly Nova, said to be the founder and CEO of Bitspay on its website, told Cointelegraph that the exchange is working on licenses in both Estonia and the United Kingdom. “We have some copyright issues and that’s why we closed the Bitspay.io domain,” he said. The exec didn’t respond to Cointelegraph’s request for further information about Bitspay founders or why the firm previously claimed to have a license in Estonia on its website.

Bitspay appears to be far from the only platform reporting massive trading volumes on CMC while little is known about its licenses, founders or background. Exchanges like Topcredit, which reports $1.8 billion in daily trades on CoinMarketCap, and Bika — reporting $1.2 billion — have been unwilling to talk to Cointelegraph about their background and founders as well.

“We have long been aware that self-reported data can be problematic but APIs are the only viable source for data collection,” a spokesperson for CoinMarketCap told Cointelegraph.

The representative also referred to the website’s scoring system, pointing out that platforms like Bitspay, Topcredit or Bika have a significantly lower score than major exchanges like Binance, which has owned CoinMarketCap since April 2020. “We always encourage our users to perform their own due diligence, especially with low scoring exchanges,” the spokesperson said, adding:

“We know our data isn't infallible. Our role is as an objective and comprehensive information aggregator, not a regulator. [...] In short, CMC numbers are as credible as they can be, using our industry leading experience, technology, verification methodology and feedback loops [...]”

The spokesperson cited the crypto adage “don't trust, verify” and said it embodies a foundational principle of cryptocurrencies and blockchain technology.

According to a public announcement, Bitspay was listed on CoinMarketCap in July 2023. CoinMarketCap’s major rival, CoinGecko, hasn’t listed this website, nor has it listed Topcredit or Bika. Despite this discrepancy, CoinGecko has significantly more spot exchanges than CoinMarketCap, does. At the time of writing, CoinGecko lists a total 784 exchanges, while CoinMarketCap lists only 225.

Websites like CoinMarketCap have frequently been criticized for providing inflated exchange trading volumes. In 2019, Bitwise Asset Management claimed that 95% of volumes on unregulated exchanges reported on CoinMarketCap were fake or non-economic wash trading in nature. Another investigation by the data analytics firm The Tie suggested in 2019 that more than 86% of reported crypto trading volume appeared suspicious.

Magazine: Big Questions: What’s with all the crypto deaths?

CoinsPaid claims North Korean hacking group used fake job interview to steal $37M

August 7, 2023 Coin Telegraph

CoinsPaid claims North Korean hacking group used fake job interview to steal M

Business

Hackers attempted to infiltrate CoinsPaid infrastructure directly starting in March 2023, but switched their approach to targeting individuals through fake high-salary job offers.

Estonia-based cryptocurrency payments firm CoinsPaid suspects North Korean hackers with the Lazarus Group gained access to its systems through fake recruiters targeting employees.

In an Aug. 7 blog post, CoinsPaid said an exploit which allowed hackers to steal more than $37 million on July 22 was the result of tricking one employee into downloading software during a fake job interview, having them believe they were completing a technical task. The firm reported that the worker responded to a job offer put out by hackers and downloaded the malicious code, allowing the bad actors to steal information and give them access to CoinsPaid’s infrastructure.

“Having gained access to the CoinsPaid infrastructure, the attackers took advantage of a vulnerability in the cluster and opened a backdoor,” said CoinsPaid. “The knowledge perpetrators gained at the exploration stage enabled them to reproduce legitimate requests for interaction interfaces with the blockchain and withdraw the company's funds from our operational storage vault.”

We Know Exactly How Attackers Stole and Laundered $37M USD

CoinsPaid invited a partnership with @MatchSystems, in cooperation with law enforcement agencies and regulators, accompanies the process of returning stolen #crypto assets.

Read more: https://t.co/jLF3ICo603 pic.twitter.com/0gDy9CJcS7
— CoinsPaid (@coinspaid) August 7, 2023

In its July 26 post-mortem report of the hack, CoinsPaid said it suspected Lazarus Group. Prior to the $37-million exploit, the hackers had made several attempts to infiltrate the platform starting in March 2023, but switched their approach to “highly sophisticated and vigorous social engineering techniques” after multiple failures — targeting individual workers rather than the company itself.

*Tracing the funds stolen from CoinsPaid on July 22. Source: CoinsPaid*

CoinsPaid said it had partnered with blockchain security company Match Systems to track the stolen funds, the majority of which were transferred to SwftSwap. According to the firm, many aspects of the hackers’ transactions mirrored those of the Lazarus Group, as in the $35-million hack of Atomic Wallet in June. The company was continuing to monitor any movement of the funds as of Aug. 7.

Magazine: Should crypto projects ever negotiate with hackers? Probably

Crypto payment gateway CoinsPaid suspects Lazarus Group in $37M hack

July 27, 2023 Coin Telegraph

Crypto payment gateway CoinsPaid suspects Lazarus Group in M hack

chainalysis

CoinsPaid said it is now working with Estonian law enforcement and several blockchain security firms are assisting to minimize the impact of the July 22 exploit.

Cryptocurrency payments platform CoinsPaid has pointed the finger at North Korean state-backed Lazarus Group as being behind the hacking of its internal systems, which allowed them to steal $37.3 million on July 22.

“We suspect Lazarus Group, one of the most powerful hacker organisations, is responsible,” CoinsPaid explained in a July 26 post.

While CoinsPaid didn’t explain how the money was stolen exactly, the incident forced the firm to halt operations for four days.

CoinsPaid is back to processing after being hit by a hacker attack. Сlient’s funds were not affected and are fully available.

More details in our blog: https://t.co/XukI4ZTTLw pic.twitter.com/XjkKjjsluE
— CoinsPaid (@coinspaid) July 26, 2023

CoinsPaid confirmed that operations are back up and running in a new, limited environment.

The firm added that customer funds remain intact but considerable damage was done to the platform and the firm’s balance sheet.

Despite the huge exploit, CoinsPaid believes the cybercrime organization were chasing a much larger sum:

“We believe Lazarus expected the attack on CoinsPaid to be much more successful. In response to the attack, the company's dedicated team of experts has worked tirelessly to fortify our systems and minimize the impact, leaving Lazarus with a record-low reward.”

CoinsPaid filed a report with Estonian law enforcement three days after the hack to further investigate the exploit. In addition, several blockchain security firms such as Chainalysis, Match Systems and Crystal assisted in CoinsPaid’s preliminary investigation over the first few days.

The firm’s CEO, Max Krupyshev is confident that the Lazarus Group will be held accountable for their actions.

“We have no doubt the hackers won’t escape justice.”

Blockchain security firm SlowMist believes the CoinsPaid hack may be linked to two recent hacks in Atomic Wallet and Alphapo, which were exploited to the tune of $100 million and $60 million respectively.

MistTrack Update

Recently, the crypto community has been stirred by a sequence of incidents involving @coinspaid, @AtomicWallet, and Alphapo.

A veneer of mystery shrouds these incidents, yet there's a possibility that Lazarus might be behind them all! pic.twitter.com/ppxRk3xtUh
— MistTrack️ (@MistTrack_io) July 26, 2023

Lazarus Group targeting crypto devs

Online coding platform GitHub believes — with “high confidence” — that Lazarus Group is conducting a social engineering scheme targeted at workers in the cryptocurrency and cybersecurity sectors.

According to a July 26 post by cybersecurity platform Socket.Dev, Lazarus Group’s objective is to lure in these professionals and compromise their GitHub accounts with malware-infected NPM packages to infiltrate their computers.

The cybersecurity platform said the first point of contact is often on a social media platform like WhatsApp, where the rapport is built before the victims are led to clone malware-laden GitHub repositories.

Socket.Dev urged software developers to review repository invitations closely before collaborating and to be cautious when abruptly approached on social media to install npm packages.

Magazine: $3.4B of Bitcoin in a popcorn tin — The Silk Road hacker’s story

Nearly 400 Crypto Firms Lose Their Estonian Licenses Under New Rules

May 11, 2023 Bitcoin.com

Estonia squeezes out 400 crypto firms after new laws

May 9, 2023 Coin Telegraph

AML

Estonia’s money laundering regulator highlighted a number of issues it found within local crypto firms, such as dodgy execs and nonsensical business plans.

Almost 400 Virtual Asset Service Providers (VASPS) have voluntarily shut down or had their authorizations revoked in Estonia following the government’s recently enhanced Terrorist Financing Prevention and anti-money laundering laws (AML) that came into effect in March.

The amended laws expanded the defined scope of VASPs, required firms to have legitimate links to Estonia, increased licensing fees, and capital and information reporting requirements, along with introducing the Financial Action Task Force Travel Rule.

According to a May 8 statement from the Estonian Financial Intelligence Unit (FIU), the amendment to the AML laws on March 15 has since seen almost 200 domestic crypto service providers voluntarily shut down.

Source: Republic of Estonia Financial Intelligence Unit

While around 189 also had their authorizations revoked due to “non-compliance with the requirements.”

“Given the documents submitted by the service providers that have lost their authorisations, and their methods of operation and the risks involved, it can be argued that the legislator’s response with regard to the amendments to the Act, and the supervision activities both before and after the amendments, have been relevant,” noted Matis Mäeker, the Director of the Financial Intelligence Unit, adding:

“In renewing authorisations, we saw situations that would surprise every supervisor.”

Following the hefty clear-out, there were 100 active crypto firms registered in Estonia as of May 1, according to the FIU.

The FIU highlighted a number of general issues it found within the companies it forcibly shut down, particularly relating to misleading company information.

To name a few examples, some companies had registered board members and company contacts unbeknownst to the actual individuals themselves, while others companies had a number of people on the books that had falsified professional backgrounds on their resumes.

It also appears that many companies had copy and pasted identical business plans from each other, which were also found to be lacking “any logic or connection with Estonia.”

Estonia has made a considered effort to enact strong AML laws across the board over the past few years. This is primarily due to the discovery in 2018 that around $235 billion worth of illicit capital had been laundered through the Estonian branch of Denmark megabank Danske Bank.

The ongoing war between Russia and Ukraine has also had an impact, as Estonia has pushed to “cut off revenues supporting Russia’s war machine and protect international financial systems,” via strong AML regulation as part of its partnership with the U.S.

Another factor which likely has contributed to the recently enhanced AML laws, is its membership to the European Union, therefore meaning it will soon have to implement the upcoming Markets in Crypto-Assets (MiCA) laws that are slated to come into effect in early 2025.

Under MiCA, crypto firms will be subject to stringent AML and terrorism prevention requirements.

Belgian crypto platform Bit4You suspends operations after CoinLoan halts activity

April 27, 2023 Coin Telegraph

belgium

Bit4You suspended operations on April 26 amid CoinLoan insolvency investigation by Estonian regulators.

Belgian cryptocurrency trading platform Bit4You has suspended all operations, including withdrawals, amid an insolvency investigation of one of its key partners.

Suite à cela, nous avons immédiatement entamé plusieurs démarches pour comprendre la nature et la portée de cette situation.

En savoir plus - https://t.co/wg7iHqN9jt
— Bit4you (@Bit4you1) April 26, 2023

The company explained the freeze in a blog post, claiming it was a necessary action to protect platform users and citing regulation against CoinLoan, a partnering cryptocurrency loan service based in Estonia:

“We would like to inform you that we recently learned that one of our major service providers, Estonia-based CoinLoan, no longer had the required registration as a custodian of virtual currencies.”

Estonian regulatory authorities issued a stop order on April 24 prohibiting CoinLoan from processing or releasing assets without the expressed consent of an appointed “temporary insolvency practitioner.” This prohibits the platform from moving, releasing, or disposing of assets, or otherwise processing transactions without such permission.

Bit4You claims, as of April 26, that it has “no indication that virtual currencies held on behalf of our customers with CoinLoan will not be recoverable.”

A blog post from CoinLoan, cited by the Bit4You team in their announcement, states that the company believes it has the capability to meet its obligations:

“Our legal team has provided enough arguments to prove CoinLoan's ability to fulfill its obligations. The appointment of a provisional administrator seems to be the simplest way for the court to find a solution by allowing an independent third party to verify the financial situation of the company.”

The post also mentions that the Estonian court’s action was “unexpected” and would have an immediate effect.

Among the current list of Bit4You user and company assets locked up in the Coinloan suspension order is more than 145 Bitcoin (BTC) worth in excess of $4 million at the time of this article’s publication. Per the company’s blog post, this represents more than 81% of the organization’s total BTC assets.

Also frozen are 638,630 Cardano (ADA), 1,247,519 XRP (XRP), 1,097 Ether (ETH), and numerous other tokens.

CoinLoan has signaled its intent to appeal the decision but maintains that it must currently comply with the Estonian court’s cessation order.

Paxful co-founders’ litigation cites misappropriation of funds, money laundering, U.S. sanctions evasion

April 6, 2023 Coin Telegraph

Coin Telegraph

A bitter dispute between Paxful's co-founders in Delaware courts may have led to the crypto marketplace's sudden closure.

A bitter dispute between Paxful’s co-founders, Artur Schaback and Mohamad (Ray) Youssef, in Delaware's courts may have been the real reason behind the Bitcoin marketplace’s sudden closure on April 4.

Schaback and Youssef, who started Paxful in 2015 with a shared passion for Bitcoin (BTC), are now litigating the company’s control, with several accusations against each other, according to court documents. The allegations include misappropriation of company funds, money laundering and evasion of United States sanctions against Russia, among others.

Founders disagree

Schaback was the chief operating officer of Paxful until February 2022, when he was allegedly blocked from participating in the company’s operations over disagreements with Youssef — Paxful’s CEO — about the marketplace’s future and operations, including conflicts about “the legitimacy of ever-increasing expenditures to undisclosed entities.”

*Court documents filed in Delaware on March 21, 2023.* *Source: U.S. Court of Chancery of* *Delaware.*

According to Schaback’s claims in the lawsuit, a large quantity of Paxful’s Bitcoin has been transferred to a Turkish entity called “EMiR,” which he claims is not a legitimate software company. “It does not have a website publicizing software or web development services and its physical address [...] appears to belong to a clothing company.”

Dekslektika, a St. Petersburg, Russia-based company owned by former Paxful directors, is a subcontractor allegedly receiving payments from EMiR. As per the court filings, those entities were accused of being behind “massive non-ordinary-course transactions” that began after Schaback was frozen out of the company’s operations. “There is no legitimate business purpose for these transfers,” says the lawsuit.

In comments to Cointelegraph, Youssef classified the claims as "ridiculous." According to him, the accusations center around salary payments to a Turkish engineering company working for Paxful. “He [Schaback] blocked these salary payments to our engineers with these accusations, claiming they were fake and even that they were performing no such services. He played an insane game of chicken until the entire team of 80 engineers stopped working. [...] Mr. Schaback himself was forced to admit that this was a critical mistake and authorized these engineers to be given their back pay at a board meeting,” noted Youssef.

*Court documents filed on March 3, 2023.* *Source: U.S. Court of Chancery of* *Delaware.*

Youssef’s point of view

Youssef claimed his co-founder’s legal tactics “bordered on terrorism” and cost Paxful many employees and directors. “His accusations were so slanderous that we lost our GC, CTO, CISO, VP of finance and VP of HR. He even went after our law firm, McDermott Will and Emery, one of the most respected law firms in the United States, demanding they be removed from representing us in Delaware,” he told Cointelegraph.

Under the imminent resignation of his team, Youssef said it was impossible to keep Schaback at Paxful.

“Artur and I were homeless for a time in NYC while we built Paxful. He came from a working-class family like me, and we bonded over many things. He worked hard in the beginning and added value. I respected that he took care of his family. Sometime around 2018, he began to change. I covered for him, but when the entire ELT threatened to resign, I had to accept the ugly truth that he had changed and was not who I thought he was.”

Schaback’s point of view

In an interview with Cointelegraph, Schaback said Youssef took unilateral action to shut down Paxful on April 4. “Mr. Youssef’s actions were meant to consolidate power in a jurisdiction outside that of the United States and to remove me and other shareholders from his plans.”

Schaback said he has limited access to information in the company and hasn’t been involved in day-to-day operations for 18 months.

“Mr. Youssef and I had fundamental differences in Paxful’s product direction and corporate governance, and you can see by his current actions that his goal all along was to remove Paxful from U.S. jurisdiction due to regulatory pressure.”

Magazine: Bitcoin in Senegal: Why is this African country using BTC?

Estonia, US Arrest 2 Suspects in $575 Million Crypto Fraud Scheme

November 23, 2022 Bitcoin.com

The state of crypto in Northern Europe: Hostile Scandinavia and vibrant Baltics

October 30, 2022 Coin Telegraph

Coin Telegraph

The Nordics remain a cold place for crypto, but Estonia still leads as the public blockchain adopter.

Despite the turbulence that broke out in the crypto market this summer, there is an important long-term marker that should be considered in any complex assessment — the combination of adoption and regulation. The latest report by EUBlockchain Observatory, named “EU Blockchain Ecosystem Developments,” tries to measure this combination within the European Union, combining the data on each and every member country from Portugal to Slovakia.

As the original report counts more than 200 pages, Cointelegraph prepared a summary with the intent to capture the most vital information about the state of crypto and blockchain in Europe. Cointelegraph started from a group of countries that are usually labeled as Western European and continues with a review of Northern European states.

Sweden

Numbers: $39.9 million (40 million euros) raised in initial coin offerings (ICOs), 15 blockchain startups launched.

Regulation and legislation: According to the report, the country still lacks any definite crypto and blockchain legislation: “One must often use the existing legal framework and force blockchain to fit within that framework.” The principal supervisory authorities in the country are the Swedish Financial Supervisory Authority and the Swedish Data Protection Agency.

Taxes: While the report lacks any information about the tax regime regarding crypto in the country, the local tax advisers specify that capital gains from selling crypto are subject to a 30% tax.

Notable initiatives: The Swedish land-ownership authority Lantmäteriet began testing blockchain technology in 2016, which resulted in a pilot project to develop future real estate transactions by using smart contracts. In June 2018, developers completed the first successful transaction on the platform. Together with Nasdaq, one of Sweden’s major banks, SEB, initiated the Nordic Fund Ledger — a consortium to improve mutual fund trading by applying blockchain. An initiative should have been launched in 2020, but by the publishing time, there is no evidence it did.

Local players: 3Box, a decentralized user data storage system, AIAR, an Ethereum-based education platform, and Bitrefill, a digital gift card and mobile airtime provider that accepts crypto as a payment method.

Denmark

Numbers: $32.4 million (32.5 million euros) of total funds raised by blockchain projects, 24 blockchain startups.

Regulation and legislation: Denmark has no laws specifically addressing cryptocurrencies. In 2021, Danske Bank, the largest bank in Denmark, stated that it won’t offer any cryptocurrency services to customers itself, but also that it wouldn’t interfere with transactions coming from crypto platforms.

Taxes: According to Coincub, crypto gains incur an income tax of around 37%: “If you’re a high earner, your crypto gains — as part of your overall income — could go up to 52% tax.”

Notable initiatives: In 2018, Copenhagen-based shipping giant Maersk and IBM announced the launch of TradeLens, a blockchain-enabled shipping solution designed to promote more efficient and secure global trade.

Local players: As the report specifies, perhaps the most important names among the Danish crypto startups would be the ones that were established in the country but registered in other jurisdictions, such as Chainalysis, Blockshipping and MakerDAO.

Finland

Numbers: 18 blockchain startups

Regulation and legislation: The chief supervisory authority for everything crypto-related in the country is the Finnish Financial Supervisory Authority. In 2019, the Act on Virtual Currency Providers came into effect. It demands registration from any entity that aims at Finnish customers while providing or marketeering its crypto-related services. The Virtual Currency Act does not draw any distinctions between different types of digital currencies.

Taxes: Profits from the exchange or sale of crypto are subject to capital gains tax, which makes up 30% of the income not exceeding $29,922 (30,000 euros) and 34% on the excess above this limit.

Notable initiatives: Back in 2018, the Finnish government announced the collaboration with Essentia to build blockchain-based solutions for smart logistics.

Local players: SOMA (SOcial MArketplace), a decentralized peer-to-peer (P2P) platform on Ethereum for trading and exchange of physical goods, LocalBitcoins, a P2P platform for digital currencies, and Haja Networks, a developer of distributed and decentralized database solutions based on blockchain solutions.

Norway

Numbers: $26.9 million (27 millions euros) of total equity funding, 22 blockchain solution providers.

Regulation and legislation: The advisory and supervisory authorities regarding blockchain and crypto are the Norwegian Data Protection Authority, the Financial Supervisory Authority (FSA), Norges Bank and the Norwegian Tax Authority. The FSA has previously noted that a legal framework and rules for investor protection are needed if cryptocurrencies become a suitable investment for consumers. However, according to the report, “It is unlikely that Norway will enact additional legislation on cryptocurrencies until the EU adopts its flagship cryptocurrency legislation, the Regulation on Markets for Crypto-Assets (MiCA).”

Taxes: As in other Scandinavian countries, crypto assets in Norway are subject to the general capital gains tax. The annual tax rate for private individuals constitutes 22%; the same percentage goes for legal entities due to a flat corporate income tax rate. However, an individual would pay more if his yearly income exceeds certain levels.

Notable initiatives: In 2021, The FSA established a regulatory sandbox to encourage fintech innovation. The Central Bank of Norway is actively exploring a central bank digital currency (CBDC), which is now proceeding through a two-year phase of technical testing.

Local players: Choose, a cryptocurrency platform backed by CO2 emission permits, ViPi Cash, an online platform facilitating global money transfers using blockchain technology, and Diwala, a decentralized platform for skill verification of individuals through the decentralized ledger technology.

Latvia

Numbers: 15 blockchain startups

Regulation and legislation: Crypto remains largely underregulated in the country. In 2020, the chief local financial regulator, the Financial and Capital Market Commission, urged investors to “be particularly vigilant, as cryptocurrencies operate in an infrastructure that is currently characterized by lower regulation than in the financial and capital markets.”

Taxes: The Latvian PIT Act defines crypto as a capital asset subject to the general capital gains tax, which is 20%.

Notable initiatives: In 2019, the Economic Ministry of Latvia introduced two blockchain-based pilot projects. The first one should strengthen the supervisory capacity of the State Revenue Service and reduce the shadow economy through the implementation of a blockchain-based cash register. The second would ease the process of acquiring limited liability company status by using blockchain systems in the Enterprise Registry.

In 2021, the national air carrier airBaltic added Dogecoin (DOGE) and Ether (ETH) as payment options. It started to accept Bitcoin (BTC) as early as 2014.

Local players: Blockvis, a blockchain development and consulting group, Velvet, a blockchain-powered solution for online identification, and Soft-FX, a software developer, which collaborated with a list of major cryptocurrency platforms such as Binance, Bifinex and others.

Lithuania

Numbers: 31 blockchain startups, $1.09 billion (1.1 billion euros) raised by local startups

Regulation and legislation: The report calls Lithuania “one of the most pro-blockchain countries in Europe.” It became one of the first countries to issue regulations on ICOs back in 2018. From 2019, every digital assets provider needs to be registered with the country’s Centre for Registers.

Taxes: Corporate tax for the crypto companies stands at 15% and the same flat rate goes for the individual’s income.

Notable initiatives: In 2018, the Bank of Lithuania launched a digital currency sandbox called LB Chain, which is envisioned to become a prototype for central bank-issued blockchain-backed coins.

Local players: DappRadar, a market intelligence vendor for decentralized applications (DApps), Bankera, a blockchain-backed digital bank, and BirDegree, a blockchain-based and gamified online education platform.

Estonia

Numbers: $284 million (285 million euros) raised, 200+ blockchain solutions providers

Regulation and legislation: Estonia was the first European country to provide clear regulations and guidelines for digital currencies. The local law recognizes digital currencies as “value represented in digital form that is digitally transferable, preservable, or tradable, and that natural persons or legal persons accept as a payment instrument.” However, digital currencies are not considered legal tender and do not otherwise possess the legal status of money.

Taxes: Digital currencies are qualified as property and their exchange is subject to a capital gains tax of 20%.

Notable initiatives: The blockchain-enabled e-Residency program allows anyone to start and manage an EU-based company completely online and, according to the report, “has proven a significant facilitator of blockchain business activity in the country.” However, it should be noted that when the country tightened the definition of virtual asset service providers (VASPs), more than 1,000 licenses were revoked from crypto firms.

The country utilizes a highly scalable and privacy-focused keyless signature infrastructure blockchain, which is being used in healthcare, property, business and succession registries, along with the state gazette and the country’s digital court system.

Local players: Idealogic, a full-cycle software development firm with strong expertise in product design and custom software development in Fintech, Cryptodevelopers.net, a developer of cryptocurrency wallets, and Solve.care, a healthcare blockchain technology company.

Key takeaways

Discussing the report takeaways with Cointelegraph, Kristina Lillieneke, CEO at BlackBird Law and a member of EU Blockchain Observatory, explained the rather low numbers demonstrated by Scandinavian countries regarding the crypto industry. While she agreed with the important factor of high taxes, Lillieneke pointed out such regional problems as regulatory uncertainty and fear-mongering among banks and media.

“Most banks have been blocking their customers from trading in crypto and founders of crypto companies have had their bank accounts forcibly closed. As most people are still dependent on the fiat banking system in the Nordics this is a strong deterrent to making innovations,” she said.

The expert drew the example of Sweden, where the local financial authority, Finansinspektionen, leads a non-stop crusade against Bitcoin. Erik Thedéen, the head of Finansinspektionen, has written numerous articles sharply criticizing Bitcoin and claiming it is only used by criminals to launder money and finance terrorism and is a large threat to the environment.

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Lillieneke expressed pessimism regarding any possibility of a U-turn in the Nordics, even with the upcoming pan-European MiCA framework. In her opinion, MiCA itself doesn’t contain any cure for the familiar problems:

“The regulations in Europe seem only to aim at limiting the market and innovation around everything that is decentralized and has the potential of empowering people while it favors centralized solutions run by the states, the EU or big-tech.”

More controversy comes with the recent transformation of Estonia, which has been one of the earliest blockchain adopters in the world and conducted a crypto-friendly policy until 2021, when the new guidelines for VASP licensing demolished all the previous gains for the industry. However, speaking to Cointelegraph, Marianna Charalambous, research project manager at the University of Nicosia and member of the EU Blockchain Observatory, noted that the country still remains one of the leaders in public blockchain implementation.

“Estonia remains an advocate of public sector blockchain initiatives on a national and European level, as a wide number of blockchain applications are being implemented in the public sector. Looking at the use of blockchain on an institutional level we can identify a different approach compared to the private sector which has been affected by the new legislation,” she stated.

Estonia

Lazarus Group targeting crypto devs

Founders disagree

Youssef’s point of view

Schaback’s point of view

Sweden

Denmark

Finland

Norway

Latvia

Lithuania

Estonia

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