A disputes partner on what asset recovery actually looks like in a jurisdiction operating under war, tight currency restrictions, and a dedicated digital asset law that still hasn’t entered into force.
For the latest session of our Digital Asset Recovery Around the World series, Fred Buret, Blockchain Investigations Manager at Recoveris, spoke with Dmytro Marchukov, partner at Impacta Law and a fellow member of ICC FraudNet. With more than 20 years in disputes across everything from contentious inheritance to investment arbitration, Marchukov has spent several recent years with crypto matters consuming a significant share of his workload. Ukraine offers a rare view of how digital assets are used, (under)regulated, traced, and recovered under some of the most difficult conditions imaginable.
Key takeaways for legal professionals, compliance teams and asset recovery specialists
A digital asset law that still hasn’t entered into force
Ukrainian law recognizes digital assets as a concept, and the country passed a law on digital assets in early 2022. It has never entered into force. The hold-up sits with parliament, which still needs to amend the tax code on the taxation of gains. In the meantime a newer draft law, more closely aligned with the EU’s MiCA regulation, is waiting to be adopted. The practical consequence today is that Ukraine has no licensed domestic VASPs, even though large numbers of individuals own, transfer, exchange and purchase crypto, and some of them declare it while many do not. Mining, by contrast, is booming, with two plants now being built close to a nuclear power station and one of them is a public-private partnership, though Russian missile strikes and the resulting power cuts have set the sector back.
Why the war pushed people even closer toward crypto
Since 24 February 2022 Ukraine’s central bank has imposed strict currency control restrictions to prevent capital outflow, an understandable measure with 6 to 8 million Ukrainians abroad and many of them still earning inside the country. Those restrictions also contributed to the demand. Holding and moving crypto became one way to circumvent the controls. As Marchukov put it, crypto has long sat at the border between the dark and the light economy, with Monero often found on the wrong side of that line. In Ukraine the same dynamic carries a sinister wartime twist.
Recovery runs through the criminal law tools
Ukraine is a civil law jurisdiction with no concept of civil fraud, so fraud is prosecuted criminally, and the related money laundering and tax evasion issues pull most matters into the criminal sphere. Chain analysis features in nearly every investigation. The country has a specialised cyber police unit that predates the crypto boom, originally built around hacking and cybercrime, and in recent years they have grown genuinely skilled with digital assets. The trade-off of the criminal route is loss of control. You hand the case, and to a degree your client, into the hands of law enforcement. Acting as the victim’s attorneys does grant access to parts of the criminal file, and using pretrial findings elsewhere requires a waiver from the investigator or prosecutor, granted as narrowly as they can manage and with undertakings attached. It is all doable, just consistently painful.
Exchange cooperation that sometimes works
Because there are no licensed Ukrainian VASPs, the cyber police build working relationships with global crypto exchanges. Marchukov has seen genuinely generous disclosure on his matters, from the KYC/AML file of an account holder down to individual transactions. He has also seen an exchange blocking an account on the authorities’ request without a formal freezing order from the court, and another instance where authorities asked an exchange to hold off unblocking assets until a new freezing order was in place. Exchange terms and conditions carry broad reservations that let them block assets, which can help the creditors. Cooperation is uneven, though, and overloaded law enforcement is a constant limiting factor. For foreign clients, engaging the relevant embassy can secure proper attention from the authorities, which in this context already amounts to preferential treatment.
Volatility, valuation and the auction problem
Albeit an inherent part of the game, volatility is the recurring headache. A monetary judgment avoids it, but stolen crypto does not, and Ukrainian legislation offers no exact guidance on which moment in time fixes value. Whether you convert at all depends on if you are seeking damages, which need conversion, or the return of the assets themselves. Where crypto is to be sold at a bailiff auction, the valuation should be set shortly ahead of the sale, yet even a same-day valuation can drift by the time the auction is held, and the buyer ultimately bids on the price at that moment. Fred noted parallel complexity in Singapore and UK matters, where the achievable value of a large token position has to account for the volume and the time needed to sell without moving the market.
Watch the full session
Ukraine shows how much of recovery depends on local procedure, the cooperation of crypto exchanges, and a clear-eyed view of volatility, the same forces Recoveris navigates across every jurisdiction we work in. As regulation finally arrives and sanctions enforcement tightens, the work is only going to grow.
Watch the full webinar on YouTube: https://youtu.be/_CcD2OlAjV4
