Exploring cryptocurrencies—opportunities and risks, responsibility, combatting criminality with the help of blockchain, and how the CIA established the tool amongst the emergence of digital assets. Iurii Gugnin, founder of Evita B2B cross-border payments platform, addresses these topics and more in an exclusive interview.
Transparency of the Cryptocurrency Market
With your extensive experience in the digital financial assets field, what are your insights on crypto trends and recent encounters with cybercrime?
"There is an evident rise in the trend of automation. I won't rule out the possibility that the development of artificial intelligence may someday lead us to witness the emergence of virtual presidents, as depicted in the works of science fiction. Perhaps it is imminent, given all the capabilities of our technologies.
As for cybercrime, its prevalence is likely to increase as tech continues to permeate our lives. The reality is that with more opportunities for hacking, there's a greater risk of digital theft."
Which cybercrimes are most common?
"Common cyber crimes of today are usually related to money laundering, with attackers connected to terrorism, drug trafficking, circumventing sanctions, etc. My current focus is increasing the transparency of financial markets with the help of cryptocurrencies, therefore reducing the number of fraudulent cases.
I recently attended a Crypto Banking Compliance Summit in Washington, DC. There, I spoke with representatives of government agencies fighting crime in the United States. Because of crypto, their work has become easier and more effective as all illegal actions are made visible.
Crypto is fully transparent—all wallets are recorded, and all transactions are permanently stored in the blockchain network. According to data, the most common and safest way for criminals to launder money is by sending parcels of cash through the USPS mail. As we introduce crypto into business-to-business payments, we reduce the ability for criminals to hide from regulation and scrutiny."
How does crypto help officials confront criminality?
"In 2018, I advised five governments—Russia, China, Brazil, South Korea, and Turkey—on crypto legalization, co-authoring some federal laws on digital assets. My main message to officials was that 'Crypto is an Intelligence Officer's dream. Because in crypto, everything is visible, open, stored for great lengths, and impossible to delete retroactively.'
Blockchain analysis systems, such as Chainalysis, are starting to be used by intelligence agencies and banks. These services mark up to 90% of wallets in popular blockchains like Bitcoin and Ether.
American intelligence services know who owns what crypto, who paid whom, how much, and when. It's completely transparent. Laundering money through crypto becomes very challenging when you essentially publicize your transaction to the whole world.
Much of the negative perception of crypto stems from an issue in education. In America, many banks are wary because their employees believe crypto is used for fraud, money laundering, and the withdrawal of illegally obtained funds. However, all transactions are recorded in the blockchain, instantly exposing any signs of criminality."
Are American authorities employing this method of control?
"I've conversed with colleagues who have investigated digital crimes in the CIA. According to them, the introduction of crypto has significantly enhanced efficiency. Interestingly, the American government is one of the largest holders of Bitcoin—because they have arrested a lot of criminals and captured their funds. In the US, you can use Bitcoin to purchase real estate or cars. In some states, you can even pay taxes. It serves as a legal form of payment, actively monitored and controlled by the state."
What is the situation in other countries?
"I resided in South Korea for a few months in 2017–18. Even back then, the Gangnam neighborhood, made famous by a song, housed two prominent crypto exchanges. People lined up with cash-filled bags, engaging in the buying and selling of crypto.
Advertisements for crypto exchanges adorned main streets and subway stations. During my time there, I provided consultations and spoke at the National Assembly of the Republic of Korea, emphasizing that the legalization of crypto simplifies monitoring, thereby enhancing the transparency of the financial system. Several legal crypto exchanges currently operate in South Korea, actively collaborating with banks and the government.
Digital assets have achieved legalization in Japan, Switzerland, and various other European countries. In essence, crypto market regulation not only exists but is systematically evolving within the majority of large, developed nations."
How do developing countries fare in this context?
"There are challenges, particularly in Africa and India. These nations tend to grapple with a scarcity of valuable exports and an abundance of imports, resulting in a negative trade balance. As a consequence, it becomes exceedingly difficult for them to allow the outflow of any currency. Nevertheless, even in these circumstances, people find ways to purchase cryptocurrencies."
Cryptocurrency's Reputation
Why has crypto earned such a 'complicated' reputation?
"In my seven years within this industry, I've come to the conclusion that crypto primarily caters to the ultra-professional user. For 99% of the population, dealing with crypto is absolutely unbearable.
Consider this scenario: losing your password or misdirecting money with no way of recovery. Each mistake translates to an irretrievable loss of funds.
In 2018, I sent $18 million worth of crypto. A single mistake in one symbol could have made all the money vanish. Fortunately, I did it properly, and the funds were safe. Many individuals are not prepared for the level of responsibility required for managing their money. This is precisely why an infrastructure of custodial banks is currently in development. These banks will take fees to store crypto for non-professionals. If a person forgets their password, they can simply visit the bank and restore the access to their funds."
Is cryptocurrency safe for the average person?
"I want to clarify that I'm not suggesting that cryptocurrencies are dangerous to the general public. Let me illustrate with an analogy. Think of a helicopter—a sophisticated device, to be blunt, crafted for highly skilled pilots. I wouldn't recommend everyone to buy a helicopter, learn to operate it, earn flying training hours, etc. However, if someone needs to move swiftly and avoid traffic jams—welcome! But be aware that this decision comes with responsibility, involving potential risks, and your life resting solely in your hands."
Fast Transactions and Minimal Bureaucracy
Despite its risks, an increasing number of people are turning to crypto. Why?
"Transfers are significantly faster in crypto. I can send USDT in 30 seconds, whereas a SWIFT transfer can take an hour at best. In some places, SWIFT can take up to a week. The difference between 30 seconds and a week is substantial.
The second aspect is the cost of payment. In crypto, a transfer costs a dollar, whereas via SWIFT, banks in the US can charge $45 for a payment, and European banks can charge 100 euros. There are no delays for compliance; everything is automated in the crypto world. You send the payment, and it arrives immediately. All compliance processes in the crypto world are automated and take mere seconds."
Crypto's Importance to International Business
Utilizing crypto demands a certain level of expertise. In your opinion, who should explore this field? What considerations should take precedence?
"If you are an importer or exporter, acquiring knowledge about crypto is essential—especially when dealing with significant sums. Thanks to services like ours, you can pay 0.25–1.5% instead of 3–5% for currency exchange, effectively reducing costs for our clients.
When it comes to cybersecurity, the critical aspect of crypto lies in password storage. What is a crypto wallet? Essentially, it's just a couple of lines of symbols. The first line is your public address, which is widely known. The second line is the password. It's crucial not to store it on your phone or computer, where it could be easily compromised.
Create a unique shuffling format of private keys for yourself and commit it to memory. Remind yourself to log in to your wallet every few weeks, treating it as if you were starting from scratch.
Changing wallets periodically is also crucial. They can become 'dirty' over time, losing compliance. Attackers attempting to hack into large wallets often send so-called 'dust' to trick you into making an accidental transaction. It's imperative to double-check everything several times.
Our Evita service significantly enhances the transparency of the financial ecosystem. We meticulously scrutinize and mark funds used by the black market in both banking and cryptosystems. When conducting transactions, we ensure the government has a complete set of documents clarifying the ownership of each crypto wallet. We are already managing large B2B transactions totaling several hundred thousand or millions of dollars.
Consider this example—when making a $100 transfer, you might be willing to pay a $5 fee. However, when dealing with substantial purchases, such as real estate, art pieces, or cars, that 5% can become a significant amount. We contribute to reducing payment costs on large transactions by 5–10 times compared to mainstream banks.
Additionally, the speed at which payments are processed. Some payments need to reach Europe or another part of the world from America by the end of the working day. We expedite this process by maintaining accounts in different countries with access to local payment systems."
How do you address the challenges of crypto technology from a user perspective?
"We store digital assets in a licensed US custodian. Even if a client forgets their Evita account password, we can recover it, and the crypto will remain in the client's possession.
We provide customers with information about the 'quality' of the cryptocurrency received: the presence of links to darknet, criminals, terrorists, sanctions, etc.
We allow crypto exchanges to pay for goods and services worldwide. A customer adds tokens to their Evita wallet, and their vendors will receive fiat currencies in their jurisdiction."
How many clients do you currently have working with you?
"We spent a year and a half studying the market. We looked into people's needs and pains and found solutions. I recalled my own experience and my issues with cards and payments while traveling and living in different countries.
Since April 2023, we have focused solely on international payments. In just six months, our turnover has grown from zero to $15 million a month. We have submitted documents to obtain a license, and while the paperwork is being considered, we work as a factoring organization.
When making transfers, we pay for the client out of our own pocket before the client's funds come to our account. This carries risk, even if the transfer takes only a minute. As we are limited by our working capital, we do not want to take unnecessary risks. With the license, we will be able to open direct accounts for clients in America, exchange crypto for fiat, and much more—all this is quick, legal, and certified."
More About Gugnin
Iurii Gugnin is the founder of Evita, a startup that focuses on B2B cross-border payments. Within six months of the service's operation, the turnover grew to $15 million a month.
Iurii holds a Ph.D. in Financial Math and a Master's degree in Computer Science. He has advised the authorities of five countries in Europe, Asia, and Latin America on cryptocurrency legalization.
He also founded the blockchain-based investment platform Karma for SME lending, automated processes for large banks and e-commerce giants (Apple, Samsung, LEGO, Nike & Disney), and created one of the first European business schools specializing in Digital Management and RIC Production.
