The US government has sought to close gaps in its sanctions program against Russia by going after blockchain and virtual currency firms it says have helped entities circumvent existing controls.
The action taken yesterday by the Treasury’s Office of Foreign Assets Control (OFAC) follows a February 24 statement from the G7 leaders in which they agreed to “continue to counter, in close cooperation with third countries, any attempts to evade and circumvent our sanctions and export control measures.”
A total of 13 entities and two individuals were sanctioned by the Treasury yesterday. They include:
- Joint Stock Company B-Crypto (B-Crypto): a Moscow-based fintech company that partnered with OFAC-designated Rosbank to enable cross-border settlements for Russian exporters using virtual currencies
- Obshchestvo S Ogranichennoy Otvetstvennostyu Sistemy Raspredelennogo Reyestra (Masterchain): a Moscow-based fintech company that issues blockchain-based tokens with various OFAC-designated Russian banks
- Obshchestvo S Ogranichennoy Otvetstvennostyu Laitkhaus (Laitkhaus): a Moscow-based fintech firm that has worked with OFAC-designated Sberbank and VTB Bank to issue, exchange and transfer digital financial assets
- Obshchestvo S Ogranichennoy Otvetstvennostyu Atomaiz (Atomaiz): a Moscow-based fintech firm that has “tokenized” precious metals and diamonds for Russian companies
- Obshchestvo S Ogranichennoy Otvetstvennostyu Veb3 Tekhnologii (Veb3 Tekhnologii) and Obshchestvo S Ogranichennoy Otvetstvennostyu Veb3 Integrator (Veb3 Integrator): Moscow-based blockchain firms with clients including OFAC-designated Sberbank and Alfa-Bank
- Obshchestvo S Ogranichennoy Otvetstvennostyu Tsentr Obrabotki Elektronnykh Platezhey (TOEP): operating as Netexchange and Netex24, it is a Moscow-based fintech that operates a virtual currency exchange. It has enabled digital payments to OFAC-designated entities such as Sberbank, Alfa-Bank and the dark web marketplace Hydra Market
- Bitpapa IC FZC LLC (Bitpapa): operates a peer-to-peer virtual currency exchange serving Russian nationals. It has enabled transactions worth millions of dollars with OFAC-designated Russian entities Hydra Market and Garantex
- Crypto Explorer DMCC (Crypto Explorer, aka AWEX): operates a Russia and UAE-based virtual currency exchange that offering conversions between virtual currencies, rubles, and UAE dirhams
“Russia is increasingly turning to alternative payment mechanisms to circumvent US sanctions and continue to fund its war against Ukraine,” said under secretary of the Treasury for terrorism and financial intelligence, Brian Nelson.
“As the Kremlin seeks to leverage entities in the financial technology space, Treasury will continue to expose and disrupt the companies that seek to help sanctioned Russian financial institutions reconnect to the global financial system.”
All designated entities will have their assets and interests in the US frozen, while transactions involving sanctioned individuals will be blocked.