Estonia Financial Agency Stops Two Year Long Investigation of Bitcoin Trader
The Estonian Financial Intelligence Unit on Friday stopped its investigation of a Bitcoin trader in the Northern Baltic European nation. The decision comes after Otto de Voogd had evidently exercised his right to remain silent over the course of two years.
In February 2014, de Voogd’s BTC.ee announced it “temporarily stopped trading due to threats issued by Estonian police.” The Estonian Financial Intelligence Unit and Border Guard Board emailed de Voogd, demanding details about the company’s registration, anti-money laundering procedures and other due diligence processes ‒ proof that he was operating in accordance with the law.
If he failed to comply, de Voogd faced three years in prison and a maximum fine of 32,000 euros. But authorities never brought formal charges against de Voogd, who calls himself a “Bitcoin hobbyist.”
De Voogd crowdsourced a small part of his legal battle. (He keeps an overview of expenses and donations here.)
He told Bitcoin Magazine he worried that if he provided the information requested by the authorities it could be used against him in court. Estonia previously charged another person for trading 2,000 euros worth of bitcoins. De Voogd, who has had approximately 9,000 euros in lawyers fees and 1,000 euros in donations, indicates his trades totaled a modestly higher amount.
He admits to profiting from the sale of bitcoins ‒ to the tune of about 270 euros. Many traders in the space make approximately one percent profit. A Bitcoiner from the Netherlands, de Voogd claims Estonia acted in violation of European Law by extending anti-money laundering laws to Bitcoin without justifying and registering the changes with the European Commission.
Throughout his trial, de Voogd claimed a “systematic attempt by Estonia to thwart Bitcoin.” He cites an imposed VAT on the total value of Bitcoin, which differs from other European nations which impose VAT mostly on margin or profit.
“Every step of the way Estonia did the utmost,” de Voogd says,“to hinder and hamper Bitcoin use, and by extension all other blockchain-based tokens and assets.”
In an April decision regarding de Voogd’s case, Estonia’s Supreme Court ruled that Bitcoin trading is subject to anti-money laundering regulation and state supervision.
The Estonian Supreme Court determined Bitcoin trading would be regulated by the nation’s anti-money laundering legislation.
“Estonia is trying to heavily restrict the use of Bitcoin,” de Voogd said. “Including the requirement to meet customers in person, as well as the requirement keep IDs of all customers and report those who trade more than 1,000 euros more per month.” Estonia is the only European Union nation to apply such strict requirements to Bitcoin.
When BTC.ee was shut down by law enforcement agencies in 2014, de Voogd demanded clarification of the nation’s laws. BTC.ee’s volume of all the trades over the course of one year was below the normal European Union anti-money laundering reporting threshold for a single transaction, de Voogd told Bitcoin Magazine. Most transactions were under 100 euros worth, he says.
“The whole purpose of my activity was to help people get started by trying some Bitcoin, so people coming in to ask questions and buy a small amount was great,” de Voogd said. “But it was not a profitable activity, not even worth the time I spent on it. If you add that **** that Estonia created over my trading, it was certainly not worth it.”
Bitcoin aside, Estonia appears to be a leader in digital innovation. Bitcoin Magazine has covered the nation’s E-Residency program. But, in discussions about Bitcoin regulation, Estonia takes a hardline approach. For instance, it was the only country in favor of VAT on Bitcoin in the European Court of Justice. Germany and Sweden argued in favor of a VAT on only the service fee. Estonia did not get its way. The court ruled Bitcoin exempt from VAT.
De Voogd doesn’t live in Estonia anymore. He plans to lodge a complaint with the European Court of Human Rights regarding “the violation of my privilege against self-incrimination, among other things.” He no longer considers Estonia a Western nation.
“One should act with the same caution one would in Russia, and make sure you have explicit permission to do something before you do anything,” he warns. “Permissionless innovation is not part of their system, you must wait until something is explicitly authorized.”