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Recent findings reveal that a cryptocurrency company transferred over $4.2 million in digital assets to a crypto wallet linked to a member of an alleged Russian arms-dealing network, who later faced US sanctions.
According to a report, the transactions involving Copper Technologies raise concerns about whether UK crypto laws have kept pace with the rapidly evolving sector, which has faced growing scrutiny for its potential to provide anonymity.
Analysis of crypto records by the Guardian and the International Consortium of Investigative Journalists (ICIJ) reveals a connection between Copper Technologies and Jonatan Zimenkov, an Israeli-born Russian national.
Zimenkov, 29, faced US sanctions in February 2023 for allegedly aiding the Russian military in the invasion of Ukraine as part of the “Zimenkov network,” led by his father, Igor Zimenkov.
Copper transferred millions of dollars worth of digital currency in May 2021 to a wallet belonging to Jonatan Zimenkov, who was later sanctioned. Although Copper was based in London at the time of the transfer, it has since relocated to Switzerland.
While Zimenkov wasn’t under sanctions when the transaction occurred, the US Treasury Department stated that the network had been active for several years before imposing restrictions on individuals and entities involved.
Copper stated that it takes compliance seriously and acted within all regulatory standards at the time of the transaction.
The revelation highlights the opaque nature of cryptocurrency and raises questions about regulating digital assets within the financial system.
Zimenkov wasn’t a Copper client, relieving the company of regulatory obligations to verify his identity.
Financial firms can file suspicious activity reports for transactions raising concerns, even if rules aren’t violated. It’s unclear if Copper filed such a report.
The UK adopted a travel rule in late 2023, requiring crypto firms to conduct checks on funds transferred to external parties.
Blockchain logs show that Copper transferred over 1,700 units of ethereum to Jonatan Zimenkov in May 2021. The purpose and original source of the assets remain unclear.
The owner of the receiving wallet is not named in blockchain records, which only display a digital currency address.
The same address was included in a US Treasury announcement in February 2023, detailing sanctions against the Zimenkov network.
The alleged sanctions evasion network’s details revealed by the US underscore the importance of verifying the identities of individuals involved in asset transfers.
Jonatan Zimenkov, who held Russian, Israeli, and Italian citizenship, was identified as part of the network involved in projects connected to Russian defense capabilities.
The US Treasury stated that Igor Zimenkov, Jonatan’s father, worked closely with his son and others to facilitate Russian defense sales to third-country governments.
Both men are accused of corresponding with sanctioned Russian defense firms and participating in deals for Russian cybersecurity and helicopter sales abroad.
Sanctions apply to several companies involved in the arms trade, including GBD Limited, described as a “Zimenkov network company” attempting to supply weapons systems to an African government.
Russian public records show Jonatan Zimenkov registered as an “individual entrepreneur” in 2019, engaging in wholesale trade of ships, aircraft, and vehicles.
Last year, Copper Technologies was implicated in a share sale benefiting a Russian banker facing US sanctions, as reported by the Guardian.
