Russia's Crypto Dodgeball Gambit Exposed as US Treasury Strikes with Lightning Speed

The U.S. Treasury Department has sanctioned 13 entities and two individuals for assisting Russian operations in evading sanctions through digital assets. The Treasury's Office of Foreign Asset Control identified companies and individuals in the Russian financial and technology sector involved in facilitating asset movement and aiding OFAC-designated persons in circumventing sanctions. This move aims to disrupt Russian financial institutions' attempts to reconnect with the global financial system by leveraging fintech entities.

How Russia's Crypto Dodgeball Game Unfolded

What's the latest scoop on Russia's attempts to skirt sanctions with digital assets?

The U.S. Treasury Department has taken aim at 13 companies and two individuals linked to Russian operations that allegedly enable sanction evasion through cryptocurrencies. These entities, the Treasury's Office of Foreign Asset Control (OFAC) alleges, have facilitated the movement of assets or aided sanctioned individuals in evading restrictions.

Crypto Firms Boosting Russian Finances

Five of the affected companies are said to be fully owned or controlled by entities previously designated by OFAC. Brian E. Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence, suggests that Russia is exploring alternative financial avenues to avoid sanctions imposed by the U.S.

"As the Kremlin looks to tap into fintech, Treasury will relentlessly expose and disrupt companies that facilitate sanctioned Russian financial institutions' reconnections to the global system," Nelson said.

U.S. Aims to Cripple Russian Finance

This move aligns with the U.S.'s broader strategy of targeting Russian financial institutions to limit their funding for the war in Ukraine. Global regulators have long expressed concern over the potential for crypto assets to be used for illicit activities or to circumvent sanctions.

Entities named by OFAC include Joint Stock Company B Crypto, Masterchain, Laitkhaus, Atomaiz, Token Trust Holdings, TOEP, and others. According to OFAC, these companies "have played a role in developing or operating blockchain-based services or enabling virtual currency payments that support the Russian financial sector, potentially facilitating sanctions evasion."

U.S. Piles on Sanctions

As a result, any assets of these companies located in the U.S. or controlled by U.S. persons have been frozen and must be reported to OFAC. All transactions involving their U.S. assets are also prohibited unless specifically authorized by OFAC.

Since Russia's invasion of Ukraine, the U.S. has continued to expand its sanctions on companies operating in Russian markets, including those that facilitate digital asset transactions.

Crypto Exchange Binance's Russian Retreat

Last year, Binance, the largest crypto exchange by volume, found itself in regulatory hot water and withdrew from the Russian market. Its Russian subsidiary was acquired by CommEx, which has also announced the closure of its website by May 10th.