National Bank of Ukraine halts BitCapital's illegal operations

The Board of the National Bank of Ukraine (NBU) decided on 4 February to classify the services provided by the BitCapital platform as financial services. Despite the company's claims of issuing loans in cryptocurrency, funds were in fact provided in hryvnia without the requisite registration.

Legislation violations

Following an analysis of transactions concluded by BitCapital, the regulator identified signs of the provision of financial services in the form of lending, which violates the Law of Ukraine "On Financial Services and Financial Companies". To circumvent legal requirements, the company disguised loans as borrowings in crypto assets. Formally, loans were issued in USDT, but in reality, funds were credited to borrowers' accounts in hryvnia.

Consumer complaints and illegal schemes

The NBU reported receiving over 700 complaints from Ukrainian citizens who encountered high interest rates and aggressive debt collection methods. Socially vulnerable groups and military personnel were particularly affected, as they were denied the exemptions provided for by legislation.

Funds were transferred to BitCapital clients' accounts through illegal p2p transfer schemes using a network of drop accounts, as confirmed by the NBU's Consumer Protection Department for Financial Services.

Regulator's response

The NBU deemed the reputation of BitCapital's key figures, executives, and owners to be unsatisfactory. It also prohibited all NBU-licensed companies from cooperating with BitCapital, including the transfer of information from credit bureaus.

The National Bank approached the British regulator, as BitCapital is owned by GOLDEN INTEREST GROUP LIMITED, a company registered in the United Kingdom. However, the NBU has no direct influence over the service due to its lack of a licence in Ukraine.

The NBU's decision can be used in court to declare contracts with BitCapital invalid. It will also be useful for law enforcement agencies investigating the company's illegal activities on Ukrainian territory.