Lithuania has carried out the largest state cryptocurrency transaction by selling 6.4-million-euros worth of digital money that had been confiscated by law enforcement.
On November 24, the State Tax Inspectorate (VMI) sold 36.85 Bitcoin, 360.38 Ether, and 11,993 Monero tokens. The execution of the transaction cost almost 13,000 euros.
VMI paid Cryptodus for transferring the virtual currency to its computers, Adamano Consulting for preparing the terms of the transaction, and Kaiser Exchange for selling the cryptocurrency.
“The whole process – from the takeover of the confiscated cryptocurrencies to their realisation – was something new for the Tax Inspectorate,” Irina Gavrilova, representative of VMI, told LRT.lt.
“Thus, we decided to hire suppliers of such financial services via a public tender. It will now be much easier to carry out such transactions in the future,” she added.
Linas Rajackas, head of Kaise Exchange, said they sold the digital funds in 20 small transactions to avoid affecting their value.
“If we had tried to sell everything at the same time, the market value of Monero, for example, would have immediately dropped by 75 percent,” he said.
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Transparency questions
According to Gavrilova, VMI did not know the origins of the digital currency, as it only “took over assets confiscated by the state and sold them”.
But the secrecy offered by cryptocurrencies has raised questions among some experts. For example, Monero – which was also sold by VMI – is often used in the dark web to buy illegal products and services, according to Rajackas.
"Cryptocurrency transactions are specific because it is often impossible to determine how the tokens were acquired and who the buyer is,” said Daiva Čibirienė, president of the Lithuanian Accountants’ Association.
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“When selling them, it is also difficult to make sure that the money comes from a legal source that is not related to arms, drug trafficking, or terrorism,” she added.
“Due to anonymity, it is impossible to determine whether the anti-money laundering provisions have been violated,” according to Čibirienė. “[The Bank of Lithuania] states that all cryptocurrency transactions exceeding 1,000 euros are suspicious and must be reported to the Financial Crime Investigation Service (FNTT).”
According to Čibirienė, it is important for the state tax authority to be able to handle cryptocurrencies, but more transparency is desired in such processes.
“I am glad that VMI knows how to handle cryptocurrencies,” she said. “However, it should act in a more transparent way, provide more data, and share good practices of how to correctly execute cryptocurrency transactions.”
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