Recent OFAC Sanctions Target 15 Entities and Individuals Facilitating Cryptocurrency-Related Services for Evading Russian Sanctions
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced sanctions against 15 entities and two individuals who have been aiding the potential evasion of U.S. sanctions on behalf of Russian nationals through cryptocurrency-related services. OFAC emphasized that these entities and individuals play a significant role in facilitating transactions to assist other sanctioned entities in evading U.S. sanctions (learn more about OFAC).
U.S. Officials Address Russia’s Shift Toward Alternative Payment Mechanisms to Evade Sanctions
Brian E. Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence, recently discussed Russia’s shift towards alternative payment mechanisms, which aim to bypass U.S. sanctions and continue funding military actions against Ukraine. Nelson reiterated the Treasury’s commitment to identifying and disrupting companies that aid sanctioned Russian financial institutions in reconnecting with the global economic system.
Russian Entities Increasingly Use Cryptocurrencies for Transfers to Darknet Markets
Blockchain analytics firm Chainalysis reported that most of the sanctioned entities and individuals are based in Russia, and their cryptocurrency services have links to the country. Among these sanctioned entities, Netex24 and Bitpapa were particularly noted for their transactions with OFAC-sanctioned banks, crypto exchanges, and darknet markets.
Chainalysis revealed that Netex24 and Bitpapa have been instrumental in facilitating funds transfers to sanctioned entities over the past two years. Their transaction history indicated that a significant portion of outflows were directed toward darknet markets and other illicit services. This research highlighted a steady increase in the value sent by these entities to sanctioned entities and darknet markets since the onset of Russia’s conflict with Ukraine.
OFAC Targets Cryptocurrency for Sanction Evasion Prevention
The OFAC’s recent action against these entities signifies an increasing focus on combating sanctions evasion through cryptocurrency, specifically targeting businesses that facilitate on- and off-ramp activities for sanctioned Russian banks. Chainalysis’ findings underscore the significance of darknet markets in the transaction history of Netex24 and Bitpapa, alongside a constant flow to exchanges with lax know-your-customer guidelines.
These sanctions represent a critical step in the U.S.’s efforts to prevent sanction evasion and limit Russia’s access to alternative financial networks. The proactive measures taken by the Treasury underscore the importance of transparency and regulation in the global cryptocurrency market to prevent misuse by sanctioned entities.
