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Ukrainian Tailor’s Shop a Front for Illegal Crypto Mining Farm

Tim Alper
Last updated: | 1 min read
Source: Alexey Novikov/Adobe

A tailor’s shop in Kovel, Ukraine, has been exposed as a front for an illegal crypto mining operation. Its masterminds connected their rigs to the local power grid – and stole electricity to power their efforts.

The incident took place in Kovel, a city in the Volyn Oblast of northwestern Ukraine. The media outlet Kovel Media reported that during a police inspection of the shop conducted in December last year, officers discovered “an illegal connection to a transformer.” This connection “allowed the crypto farm operators” to “consume unmetered electricity.”

A court in the city ordered the shop’s owner – Alla Dieneka – to pay damages of over $11,500 to Volenoblenergo, the city’s electricity provider. She was also ordered to pay court costs of just under $200.

How Did Illegal Crypto Miners Bypass their Meter?

The court heard how officers had discovered that the shop’s operators had accessed the “voltage circuits” on a Volenoblenergo transformer by “dismantling the plexiglass cover” of the unit and disconnecting a series of wires.

They then proceeded to connect the shop’s electrical units to the grid – thus bypassing the store’s own meter. This allowed them to draw power directly from the local network.

The court heard that a group of 51 people may have been complicit in the crime, with “sections” of the shop refitted with “internet-connected computer equipment,” as well as “additional technical equipment” that “converted electricity into cryptocurrency.”

Dieneka reportedly pleaded guilty to the charges, and although she has the right to appeal the verdict, she will likely not seek to do so.

Ukraine’s government has expressed pro-crypto sentiments and has attempted to create a progressive system of regulation for the sector.

It has also attempted to use crypto as a fund-raising tool for its military struggle with Russia. And while crypto mining is not illegal in the nation, police have attempted to crack down on those seeking to steal money from public power grids to power their rigs.

Last month, the central National Bank of Ukraine revealed a draft concept for a digital UAH, which it hopes will eventually be used to make retail non-cash payments.