The U.S. has sanctioned 13 Russia-linked FinTechs for allegedly using cryptocurrency to evade bans.
“Russia is increasingly turning to alternative payment mechanisms to circumvent U.S. sanctions and continue to fund its war against Ukraine,” Brian Nelson, under secretary of the U.S. Treasury for terrorism and financial intelligence, said in a Monday (March 25) announcement.
“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,” Nelson added.
The sanctions — administered by the Treasury Department’s Office of Foreign Assets Control (OFAC) — target a series of 13 FinTechs based in Moscow, including Atomaiz, B-Crypto, Masterchain, Veb3 Tekhnologii and Veb3 Integrator, and Tokenhurt, a Cyprus-based company that is also majority-owner of Atomaiz.
“As a result of today’s action, all property and interests in property of the designated persons described above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC,” the announcement said. “In addition, any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked.”
The U.S. levied sanctions on Russia in 2022 following its invasion of Ukraine. Speaking to PYMNTS soon after, Chainalysis’ Andrew Fierman said that those sanctions don’t necessarily mean companies need to shy away from dealing with crypto.
“What many people don’t really understand is that cryptocurrency is actually incredibly transparent,” said Fierman, director of sanctions strategy at the blockchain data platform, and a veteran of companies such as Barclays and JPMorgan Chase.
He pointed out that cryptocurrencies operate on publicly open, immutable blockchain ledgers — which means that once a transaction is recorded onto one, it cannot be changed or deleted.
“That means that anyone at any time can look up the entire history of transactions using a public block explorer,” Fierman added.
Meanwhile, a report last month by Chainalysis found that a decline in crypto activity in 2023 led to a corresponding drop in crypto money laundering, with illicit addresses sending $22.2 billion worth of cryptocurrency to services, a steep fall from the $31.5 billion sent the year before.
“Some of this drop may be attributed to an overall decrease in crypto transaction volume, both legitimate and illicit,” the report said. “However, the drop in money laundering activity was steeper, at 29.5%, compared to the 14.9% drop in total transaction volume.”
