The unexpected passing of Yevgeny Prigozhin, owner of the Wagner private military company (PMC), has led to speculations about his ownership of the 5th largest Bitcoin wallet in the world (worth about $2.6 billion dollars).
Here's a summary of the unfolding events and the alleged ties:
- The Tragic Event: On August 23, a plane crash in the Tver region resulted in the death of all 10 passengers, including Yevgeny Prigozhin and Dmitry Utkin, the commander of Wagner.
- Cryptocurrency Speculations: Following the crash, rumors emerged online suggesting that Prigozhin controlled a massive cryptocurrency wallet containing about 100,000 Bitcoins, valued at roughly $2.6 billion. The rumor is that 70% of these Bitcoins are stored in cold wallets, with the rest distributed between crypto exchanges Binance and BTC-W. If true, Prigozhin would be among the top five Bitcoin holders globally.
- Potential Interest in Bitcoin: The year 2022 saw heightened tensions between Russia and Ukraine, leading to sanctions against Russia. Major financial institutions, including Visa and Mastercard, pulled out of Russia, prompting many Russians to view cryptocurrency as an alternative for cross-border transactions. Wagner's involvement in various regions, especially Africa, suggests that Bitcoin could be a convenient medium for their transactions, especially in shadow markets. Additionally, Bitcoin's potential for anonymous transactions might appeal to entities operating in the darknet.
Why Would Progozhin Invest in Bitcoin?
Bitcoin offers a number of benefits over fiat currency and here are some potential reasons why Prigozhin might have considered holding Wagner's finances in Bitcoin:
Sanctions and Financial Restrictions:
In 2022, tensions between Russia and Ukraine escalated, leading to a series of sanctions against Russia. Major financial institutions, including Visa and Mastercard, ceased their operations in Russia.
This restricted cross-border transactions and made it challenging for entities like Wagner to conduct international financial operations. Cryptocurrencies, especially Bitcoin, offer an alternative to traditional banking systems, allowing for seamless cross-border transactions without the constraints of sanctions.
Anonymity and Security:
Bitcoin transactions can be conducted with a high degree of anonymity, especially when proper security precautions are taken. For a private military company involved in covert operations or activities that might not be internationally sanctioned, the ability to move funds anonymously can be a significant advantage.
Wagner's known operations in various regions, particularly in Africa, might require a flexible and swift financial mechanism. Bitcoin, given its decentralized nature and global acceptance, can facilitate smoother, long-distance financial transactions, especially in shadow markets where traditional banking might not be as effective or swift.
Hedging Against Currency Instability:
Given the economic uncertainties and potential volatility of the Russian Ruble due to sanctions and geopolitical tensions, Bitcoin could serve as a hedge against currency devaluation. Cryptocurrencies, in general, are not tied to any specific country's economy, making them a potential safe haven during economic downturns.
Growing Acceptance of Cryptocurrencies:
Over the years, cryptocurrencies have gained wider acceptance, not just as an investment but also as a medium of exchange. By holding finances in Bitcoin, Wagner could potentially tap into a broader network of services and vendors that accept cryptocurrencies.
Potential for Appreciation:
Bitcoin and other cryptocurrencies have shown the potential for significant appreciation over time. Holding finances in Bitcoin could be a strategic move to benefit from potential future price increases.
It's essential to note that while these reasons provide a rationale for why entities like Wagner might be interested in Bitcoin, concrete evidence confirming Prigozhin's involvement in cryptocurrency transactions or the exact reasons for such involvement is yet to be established.