Sanctions lists that are raising crypto funds for Russia

by | Nov 7, 2022 | News, World | 0 comments

As a direct response to the ongoing invasion of Ukraine by Russian forces, the United States Department of the Treasury has today announced the addition of 24 individuals and two entities with ties to the Russian government to the sanctions list maintained by the Office of Foreign Assets Control (OFAC).

The list includes organizations that OFAC claims backed Russia’s invasion of Ukraine. These organizations include Task Force Rusich, an alleged neo-Nazi paramilitary outfit that the agency claims fought with Russia’s troops in Ukraine.

Evasion prevention and a more isolated financial system in Russia

In retaliation for Russia’s continuation of its invasion of Ukraine in February 2022, the United States and an international coalition of friends and partners moved swiftly to significantly cut off Russia’s access to the world’s financial system. They did this in reaction to Russia’s actions. As a direct result of this, Russia has been working feverishly to develop innovative approaches to the processing of payments and the execution of transactions. The unjustified war being waged by the Kremlin has been sponsored both directly and indirectly by Russia’s financial technocrats.

The designations announced today are directed at such efforts. Given the extensive sanctions that have been imposed on Russia’s financial system this year, OFAC is also publishing a Frequently Asked Question (FAQ) document to provide additional guidance on the increased risk of assisting Russia’s efforts to evade sanctions through the expanded use of the National Payment Card System (NSPK) or the Mir National Payment System. This is being done to provide information on the increased risk of doing so.

Vladimir Valerievich Komlev (Komlev) serves as both the Chairman of the Management Board and the Chief Executive Officer of NSPK. NSPK is a corporation that is owned by the Central Bank of the Russian Federation and is responsible for operating the Mir payment card network inside that nation. In 2014, because of concern about potential penalties from the United States and Europe, Russia established its card payment system that is managed by the state. As part of his job, Komlev has been traveling across the world spreading awareness about the Mir network, which has the potential to help Russia evade international sanctions.

The reason behind the actions

This action is being taken in cooperation with those taken by the United States Department of Commerce, which is imposing further export control restrictions to better align with allies and partners as well as by the United States Department of State, which is attacking Russia’s military and high-technology businesses.

OFAC did not stop at just adding Task Force Rusich to its list of sanctioned organizations; the organisation also disclosed and blacklisted cryptocurrency addresses associated with Bitcoin, Ether, and USDT.

Before Russia began its invasion of Ukraine in February of this year, cryptocurrency contributions started streaming into the country as both sides looked to supporters all over the world and used digital assets to get around limitations on border crossings.

According to a report published in July by the blockchain analytics company Chainalysis, organizations with ties to Russia had raised a total of $2 million in cryptocurrency. The vast majority of the funds raised were transferred in the cryptocurrencies Bitcoin ($1.45 million) and Ethereum ($590,000), with “considerable quantities” also transferred in the cryptocurrencies Tether, Litecoin, and Dogecoin.

Final Thoughts

On the other hand, Bitcoin, Ethereum, TRON, Polkadot, Dogecoin, and Solana were among the cryptocurrencies that contributed to Ukraine’s over $100 million in cryptocurrency contributions by March 2022, according to the blockchain analytics platform Elliptic. These cryptocurrencies included Solana. Among these gifts was a sum of five million dollars from Vitalik Buterin, the co-founder of Ethereum. In recent months, OFAC has increased its investigation and penalizing of cryptocurrency addresses. As part of this expansion, the organization has included the Tornado Cash coin mixing service as well as multiple Ethereum addresses, claiming the usage of the service in money laundering.