OFAC imposes sanctions on 13 entities and 2 individuals with ties to Russia
The Office of Foreign Assets Control (OFAC) has stepped up enforcement efforts, tightening controls on individuals and entities operating in Russia’s financial services and technology sectors, particularly those involved in virtual assets, to evade U.S. sanctions.
Enforcement agencies alleged that these individuals and entities played a significant role in facilitating transactions or providing services to assist other designated entities in evading sanctions imposed by the United States.
OFAC tightens controls on Russian companies
According to an official statement, OFAC declared sanctions against 13 entities and two individuals involved in the financial services and technology sectors within the Russian economy. Additionally, five entities were previously designated for association with OFAC-designated individuals.
Brian E. Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence, said:
“Russia is increasingly turning to alternative payment mechanisms to circumvent U.S. sanctions and continue to finance its war with Ukraine. “As the Kremlin seeks to leverage companies in the financial technology sector, the Treasury Department will continue to expose and disrupt companies that seek to help sanctioned Russian financial institutions reconnect to the global financial system.”
The Treasury’s list of companies consists of Moscow-based fintech companies such as B-Crypto, Masterchain, Atomaiz, Veb3 Tekhnologii and Veb3 Integrator. It also includes Tokentrust, which is headquartered in Cyprus and holds a majority stake in Atomaiz.
Interestingly, Atomaiz, controlled by Russian billionaire Vladimir Potanin’s Interros Holding investment group, secured Russia’s first government license to issue and exchange digital financial assets in February 2022, just three weeks before Russian troops invaded Ukraine. I did.
Chainalytic reveals the activities of Netex24 and Bitpapa
OFAC highlighted in its press release that Netex24 and Bitpapa have a history of transacting using cryptocurrencies with OFAC-approved banks, cryptocurrency exchanges, and darknet markets.
Netex24, along with similar institutions, facilitated transfers to authorized Russian banks such as Tinkoff and Sberbank, according to findings from the Blockchain Intelligence Platform. Chainalytic identified clusters connected to both services.
Additional analysis of on-chain data over the past two years revealed that Netex24 and Bitpapa facilitated significant fund transfers to sanctioned entities. Darknet markets account for a significant portion of trading activity, with exchanges lacking know-your-customer (KYC) protocols, many of which are Russian-language platforms offering services linked to authorized Russian banks.
Another notable finding is that the amount of money sent by Netex24 and Bitpapa to sanctioned entities and darknet markets has steadily increased since the start of Russia’s conflict in Ukraine. Meanwhile, transfers to exchanges and other illicit services without KYC requirements have remained relatively stable.
In addition to supporting transactions for high-profile sanctioned financial services and cryptocurrency companies, Netex24 and Bitpapa were found to have facilitated money transfers for various pro-Russian militias and propaganda groups, including MOO Veche, an OFAC-designated Russian militia group. These groups are known to operate in the Donetsk, Luhansk, and Crimea regions of Ukraine.
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