OFAC sanctions 13 entities for helping Russia circumvent sanctions via crypto

Photo of author

By Harper Lee

The US Treasury Department’s Office of Foreign Assets Control (OFAC) on Monday sanctioned 13 entities and two individuals for facilitating potential sanctions evasion on behalf of Russian nationals by creating cryptocurrency-related services.

OFAC emphasized in a statement that many individuals and entities sanctioned Monday facilitated transactions or offered services to help other designated entities evade sanctions.

“Russia is increasingly turning to alternative payment mechanisms to circumvent U.S. sanctions and continue to finance its war against Ukraine,” said Brian E. Nelson, Treasury Undersecretary for Terrorism and Intelligence. financial, in the press release.

Nelson added that Treasury will continue to “expose and disrupt companies that seek to help sanctioned Russian financial institutions reconnect to the global financial system.”

Growing efforts

In a blog post, blockchain analysis firm Chainalysis has detailed how some crypto companies have contributed to sanctions evasion. “Most of the sanctioned entities and individuals are based in Russia and all are linked to Russia through the services they provide. »

According to Chainalysis, two companies – Netex24 and Bitpapa – particularly stood out among all the newly sanctioned entities. OFAC noted that Netex24 and Bitpapa have a history of conducting transactions with OFAC-sanctioned banks, crypto exchanges, and darknet markets using cryptography.

Netex24 supports the exit of sanctioned Russian banks Tinkoff and Sberbank, as well as other similar organizations, Chainalysis said. Bitpapa operates a peer-to-peer crypto exchange and offers services to Russian nationals, according to OFAC.

Chainalysis went on, citing on-chain data, to report that over the past two years, Netex24 and Bitpapa have “facilitated the significant sending of funds to sanctioned entities.” The research firm highlighted that darknet markets made up a significant part of the transaction history in terms of exits from both to illicit and risky services.

“The value sent by Netex24 and Bitpapa to sanctioned entities and darknet markets has increased steadily since the start of Russia’s war in Ukraine, while the value sent to exchanges without [know-your-cutomer] guidelines and other illicit services have remained relatively stable,” Chainalysis said.

Chainalysis explained that it appears that OFAC is increasingly focused on combating sanctions evasion through crypto businesses that facilitate the entry and exit activities of sanctioned Russian banks.

Disclaimer: The Block is an independent media outlet providing news, research and data. Since November 2023, Foresight Ventures has been a majority investor in The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to provide objective, impactful and current information about the crypto industry. Here is our current financial information.

© 2023 The Block. All rights reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Leave a Comment