Market News: 130 Shadow Crypto Platforms Wiped Out in Kazakhstan

In a violent crackdown on the shadow crypto networks, Kazakhstan closes 130 illegal crypto platforms and seizes 16.7M assets.

Kazakhstan has launched an indiscriminate crackdown on unregistered cryptocurrency exchanges, closing down 130 illegal crypto exchanges and confiscating virtual currencies worth 16.7 million. 

This action is aimed at the shadow crypto-exchanges that are engaged in laundering criminal funds, a strong indication that Kazakhstan is keen to ensure a clean-up of its digital asset industry without losing its status as a blockchain innovation center.

Massive Crypto Cleanup Shakes Market

The Financial Monitoring Agency (AFM) of Kazakhstan affirmed that it ended the operations of 130 shadow crypto platforms functioning beyond legal frameworks. 

According to the words of the Deputy Chairman Kairat Bizhanov, these platforms had a big role in the processing of illegal money. 

The crackdown spreads to 81 underground organizations whose turnover is estimated at more than 24 billion KZT (more than 43 million dollars), which are mostly associated with illegal cash-out operations.

The strategy of Kazakhstan follows its legal requirement whereby only crypto exchanges licensed by the Astana Financial Services Authority (AFSA) and connected with local banks should be operational. 

The Law on Digital Assets regulates these licenses and is a criminal offense against unauthorized crypto platforms.

The crackdown also indicates an apprehension of anonymous cash withdrawals via ATMs. Cash withdrawals increased to 13.2 trillion KZT (24.1 billion) in spite of the measures, which is one trillion higher than the year before. 

Stricter rules and regulations have also been implemented by regulators, including the compulsory entry of one of the required individual identification numbers (IIN) during card top-ups to over 500,000 KZT (approximately 913) and storage of ATM camera footage within 180 days. 

There is a strategy to extend biometric verification, such as facial and fingerprint recognition of cash transactions.

Strengthening Regulations to Combat Money Laundering

Kazakhstan is tightening its grip on shell companies that are being used in financial fraud and money laundering. 

Over the past three years, the authorities blocked registration of approximately 3,600 fake companies on the basis of about 30,000 fraudulent transactions estimated at 280 billion KZT (almost 511 million). 

The attempts to increase the business registration procedures to risk-based verification of the founders and executives of companies are made in collaboration with the AFM and the Ministry of Justice, and the Ministry of Artificial Intelligence.

The crackdown is placed next to the intentions of Kazakhstan to become a global leader in blockchain technology and the regulation of digital assets. 

The nation fosters a controlled crypto market by licensed platforms as well as eliminating illegal participants in the ecosystem.