Home Crypto Market Movers US Treasury Imposes Sanctions on Russian Crypto Firms for Alleged Role in Evasion Activities

US Treasury Imposes Sanctions on Russian Crypto Firms for Alleged Role in Evasion Activities

US Treasury

According to the Office of Foreign Assets Control (OFAC), thirteen entities and two individuals have been designated for their alleged involvement in enabling transactions and providing crypto services aimed at bypassing sanctions. These entities are purportedly operating within Russia’s financial infrastructure and have been identified as actively supporting entities sanctioned by OFAC.

The US government’s decision to target these crypto firms underscores its commitment to combatting illicit financial activities and ensuring compliance with international sanctions regimes. By imposing sanctions on entities involved in facilitating sanctions evasion, the Treasury aims to disrupt illicit financial flows and prevent sanctioned entities from accessing global financial networks.

Brian E. Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence, emphasized the importance of addressing the evolving tactics used by sanctioned entities to circumvent US sanctions. He noted that as Russia seeks alternative payment mechanisms to fund its activities, it is imperative for Treasury to identify and disrupt entities facilitating such evasion efforts.

Among the entities targeted by the sanctions are prominent Russian cryptocurrency exchanges, including Netex24 and Bitpapa. These companies have allegedly been involved in facilitating significant transactions to OFAC-designated entities over the past two years. Chainalysis, a leading blockchain research firm, has identified clusters associated with both services using on-chain data.

The report by Chainalysis sheds light on the operations of Netex24 and Bitpapa, revealing their role in facilitating transactions with sanctioned Russian banks through Russian-language sites offering on and off-ramping services. Furthermore, the report highlights the prevalence of exchanges operating without proper Know Your Customer (KYC) controls and their involvement in facilitating illicit financial activities.

The sanctions imposed by the US Treasury prohibit all transactions and interactions between the designated entities and US individuals. This measure aims to sever ties between these entities and the US financial system, thereby disrupting their ability to operate on a global scale.

In addition to the regulatory actions taken by the US government, international efforts to combat sanctions evasion and illicit financial activities are also gaining momentum. The Group of Seven (G7) countries, comprising some of the world’s largest economies, have been actively collaborating to address these challenges and enhance sanctions compliance measures.

Brian E. Nelson, the Under Secretary of the Treasury for Terrorism and Financial Intelligence, elucidated the gravity of the situation, emphasizing Russia’s inclination towards alternative payment mechanisms to finance its ongoing conflict with Ukraine. The Treasury vows to persist in its efforts to unveil and disrupt entities seeking to facilitate the reintegration of sanctioned Russian financial institutions into the global financial fold.

Unraveling the intricate web of alleged complicity, blockchain research firm Chainalysis has unveiled the roles played by two of the newly-sanctioned entities: Netex24 and Bitpapa. Netex24, a Moscow-based fintech company masquerading as a crypto exchange, and Bitpapa, a peer-to-peer exchange facilitating payments for Russian crypto businesses on OFAC’s radar, have purportedly been instrumental in facilitating transactions with sanctioned entities over the past couple of years.

Chainalysis, armed with on-chain data, delineates the modus operandi of these entities, shedding light on their involvement in transactions with sanctioned Russian banks through Russian-language platforms. Notably, the absence of robust Know Your Customer (KYC) controls and the prevalence of darknet markets in their transaction history paint a grim picture of potential illicit activities.

The implications of these sanctions extend beyond the crypto industry, impacting broader geopolitical dynamics and international relations. As governments worldwide step up their efforts to regulate the crypto sector and combat illicit financial activities, stakeholders must navigate evolving regulatory landscapes and ensure compliance with applicable laws and regulations.

In conclusion, the US Treasury’s decision to impose sanctions on Russian crypto firms underscores the growing importance of regulatory oversight in the digital asset space. By targeting entities involved in facilitating sanctions evasion, authorities are sending a clear message that illicit financial activities will not be tolerated. As the crypto industry continues to evolve, regulatory compliance and sanctions adherence will remain key priorities for governments and stakeholders alike.

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Evie is a blogger by choice. She loves to discover the world around her. She likes to share her discoveries, experiences and express herself through her blogs.

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