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Russian courts: fines are excessive punishment for publishing cryptocurrency ads

The Eleventh Appellate Arbitration Court upheld the first instance decision on converting the fine of ₽ 50 000 (about $ 800) for placing cryptocurrency investment ad to a warning. The court ruling was issued on August 6.

The parties involved in dispute subject to the appeal were “Yedinstvo NK” LLC, the publisher of “Yedinstvo Nizhnekamsk” newspaper, the Federal Antimonopoly Service (FAS) for the Republic of Tatarstan and the local National Bank (Vyatsky Department of the Bank of Russia). The dispute arose when the bank staff ran across the advertisement in “Yedinstvo Nizhnekams” newspaper which read as follows:

“Investments in cryptocurrencies. Bitcoin, Ethereum, Zcash. Assembling and setting up mining farms”.

There was also a phone number in the advertisement.

The Bank of Russia appealed to the FAS, whereas the latter deemed the said advertisement to be published in violation of the Part 1 of the Article 14.3 of the Code of Administrative Offences of the Russian Federation (“violating by an advertiser, by an advertising producer or by an advertising agent the legislation on advertising”).

“It follows from the content of the abovementioned advertisement, that these are financial services which Blumhen Rihard Timurovich (who is the owner of the phone number given in the ad) provides, not advisory ones,” – the FAS concluded on the matter.

According to the watchdog, the announcement did not contain the name of the service provider in violation of the Part 1 of the Article 28 of the Law on Advertisement, and thus, “Yedinstvo NK” was subject to administrative proceedings.

Part 1 of the Article 14.3 of the Code of Administrative Offences of the Russian Federation envisages the imposition of an administrative fine at the rate of ₽ 100 000 to ₽ 500 000 ($1 600 – $8 000) on a legal entity. Given the mitigating excuse, the FAS was going to fine “Yedinstvo NK” only ₽ 50 000 ($ 800), but the court concluded this would be an excessive punishment and converted the fine to a warning, while taking into consideration that the violation was not associated with any threat to property damage or security of the State.

As reported earlier, Moscow City Arbitration Court has recently finalized the precedential bankruptcy case, which resulted in juridical recognition of bitcoins as a type of property.