Or Fireworks Coming?
The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has sanctioned 13 entities and two individuals for operating in the financial services and technology sectors of the Russian economy, including those developing or offering services in virtual assets that reportedly enable the evasion of US sanctions, as reported by the Treasury Department on Tuesday, March 26. Five entities were designated for being owned or controlled by OFAC-designated persons.
According to the Treasury, many designated individuals and entities facilitated transactions or offered services that helped OFAC-designated entities evade sanctions. These designations follow OFAC’s action earlier this year, targeting companies servicing Russia’s core financial infrastructure and curtailing Russia’s use of the international financial system to fund its war against Ukraine.
Under Secretary of the Treasury for Terrorism and Financial Intelligence, Brian E. Nelson stated,
“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.”
The sanctioned companies include Moscow-based fintech firms B-Crypto, Masterchain, Laitkhaus, and Atomaiz, which have reportedly partnered with or provided services to various OFAC-designated Russian banks, such as Rosbank, VTB Bank, Sberbank, and Sovcombank, to facilitate cross-border settlements, issue digital financial assets, and tokenize precious metals and diamonds. Tokentrust Holdings Ltd., based in Cyprus and the majority shareholder of Atomaiz, was also designated.
Other sanctioned entities include Veb3 Tekhnologii and Veb3 Integrator, Moscow-based technology companies providing blockchain solutions and platforms to clients like Sberbank and Alfa-Bank, with their majority shareholder Igor Veniaminovich Kaigorodov also being designated. TOEP, a Moscow-based fintech company operating a virtual currency exchange under the business names Netexchange and Netex24, was sanctioned for enabling digital payments in rubles and virtual currencies to OFAC-designated entities such as Sberbank, Alfa-Bank, and Hydra Market, with its owner and director Timur Evgenyevich Bukanov also being designated.
SEC Declares War on Crypto | This Week in Crypto – Sep 25, 2023The Treasury also targeted Bitpapa, a peer-to-peer virtual currency exchange that has conducted transactions worth millions of dollars with OFAC-designated Russian entities Hydra Market and Garantex, and Crypto Explorer, a Russia and UAE-based virtual currency exchange offering conversions between virtual currencies, rubles, and UAE dirhams, as well as cash services at its offices in Moscow and Dubai.
In addition to the crypto-related sanctions, OFAC designated several companies associated with the OFAC-designated Echelon Union for Science and Technology, a Moscow-based entity licensed by the Russian Federal Security Service and the Russian Ministry of Defense, for operating in the technology sector of the Russian economy.
As a result of these actions, all property and interests in property of the designated persons in the United States or the possession or control of US persons are blocked and must be reported to OFAC. The Treasury also warned that foreign financial institutions conducting or facilitating significant transactions or providing services involving Russia’s military-industrial base risk being sanctioned by OFAC.
The sanctions aim to disrupt Russia’s ability to use alternative payment mechanisms and leverage entities in the financial technology space to circumvent US sanctions and continue funding its war against Ukraine. As the Treasury continues to monitor and respond to Russia’s evolving sanctions evasion tactics, it remains committed to upholding the integrity of the international financial system and pressuring Russia to change its behavior.
