Latest news with #Garantex
Business Insider
2 days ago
- Business
- Business Insider
How Russia is building a crypto-powered shadow economy to dodge sanctions
Russia has quietly developed a crypto-fueled network of payments systems that's helped it evade Western sanctions over its war in Ukraine. That assessment comes from blockchain analytics firm Chainalysis, which said it believes Russia had created a "shadow crypto economy" in the years following its invasion of Ukraine in order to sidestep financial punishment by the US and its allies. The report highlighted one crypto token in particular tied to Russian businesses trying to trade under the radar. The coin, called A7A5, has been used to process over $51.1 billion worth of transactions from the time it was issued through the end of July, per Chainalysis data. The crypto, which is backed by the Russian ruble, was transacted on a "fairly small subset" of crypto exchanges, many of which had "notable" ties to Russia, Chainalysis researchers said. Garantex, a crypto exchange with heavy ties to Russia on which the A7A5 was largely traded, was sanctioned by the US in 2022. Grinex, which was created by Garantex employees in 2024 to bypass sanctions, according to the US Treasury Department, was also sanctioned by the US this week. Old Vector, the Kyrgyzstan-based issuer of A7A5, which is backed by Russia's state-owned Promsvyazbank, has also been sanctioned. A7A5 was largely traded during the workweek, with transaction volumes collapsing over the weekend. That suggests the cryptocurrency was used primarily for business exchanges, Chainalysis said. "These trading patterns suggest that A7A5 is primarily being used by businesses operating Monday through Friday, which would align with Russia's legislative goals of facilitating cross-border transfers for Russian businesses via cryptocurrency," the report said. The firm pointed to recent updates to Russia's crypto legislation in the past year. The nation recently legalized crypto mining and cross-border crypto payments, a move that was likely a "deliberate effort to build alternative financial infrastructure" in response to tariffs, Chainalysis said. "The emergence of the A7A5 network sanctioned today further illustrates how Russia is operationalizing these alternative payment rails," the report said. "Backed by sanctioned Russian institutions, A7A5 is providing a new, crypto-native avenue to bypass the ever tightening sanctions against Russia. Time will tell if A7A5 will expand to a larger retail market," it added. Russia has embraced alternative assets, like gold and crypto, as a means to bypass sanctions since invading Ukraine in 2022. In July, Russia's top financial regulator said that the nation's cross-border transactions were on the rise with countries in the Middle East, Southeast Asia, and Central Asia. The nation's share of global trade in crypto and gold have also increased, he added.
Yahoo
2 days ago
- Business
- Yahoo
U.S. Blacklists Crypto Network Behind Ruble-Backed Stablecoin and Shuttered Exchange Garantex
The U.S. Treasury's Office of Foreign Assets Control (OFAC) on Thursday sanctioned a network of companies, exchanges and executives linked to shuttered Russian crypto exchange Garantex and the ruble-backed stablecoin A7A5, accusing them of helping Moscow skirt international sanctions. Garantex, founded in 2019 and once licensed in Estonia, processed more than $100 million in transactions linked to ransomware and darknet activity, OFAC said. U.S. officials, working with German and Finnish police, seized its web domain and froze $26 million in March, which quickly prompted the creation of its successor Grinex to continue operations, officials said. OFAC said on Thursday that Grinex transferred customer funds from Garantex and used the A7A5 token to restore access after the seizures. Issued by Kyrgyzstan-based firm Old Vector, A7A5 was created for Russian users of A7 LLC, a cross-border settlement platform, the agency said. It is backed by Russia's state-owned Promsvyazbank (PSB), who was sanctioned for financing the defense industry, and Moldovan politician Ilan Shor, who was convicted in a $1 billion bank fraud case, the Centre of Information Resilience reported. OFAC sanctioned Old Vector, A7 LLC and its subsidiaries A71 and A7 Agent, blocking them from the U.S. dollar-based financial system and barring U.S. persons from interacting with any of these entities or more than a dozen crypto addresses tied to them. Key Garantex executives Sergey Mendeleev, Aleksandr Mira Serda and Pavel Karavatsky were also sanctioned, along with Mendeleev's firms InDeFi Bank and Exved, accused of enabling sanctioned Russian businesses to trade through crypto rails. Treasury officials said the action, coordinated with the U.S. Secret Service and the FBI, was aimed to cut off digital asset channels used for ransomware and sanctions evasion. "Exploiting cryptocurrency exchanges to launder money and facilitate ransomware attacks not only threatens our national security, but also tarnishes the reputations of legitimate virtual asset service providers," said John K. Hurley, Under Secretary of the Treasury for Terrorism and Financial Intelligence, in a statement. Crypto rails to evade sanctions A7A5 has grown rapidly this year, processing about $1 billion a day by July, according to blockchain analytics firm Elliptic's report. The firm said the token underpins a "sanctions evasion scheme" enabling Russian companies to settle cross-border payments outside the traditional banking system. Chainalysis estimated the token's cumulative transaction volume exceeded $51 billion through July, warning it offers "a new, crypto-native avenue to bypass the ever-tightening sanctions against Russia." "The emergence of the A7A5 network sanctioned today further illustrates how Russia is operationalizing these alternative payment rails," the firm in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
UPI
2 days ago
- Business
- UPI
State Department offers $6 million reward in Russian crypto scheme
Aug. 14 (UPI) -- The State and Treasury departments are offering rewards of up to $6 million for information leading to arrests in a Russian-operated cryptocurrency scheme, officials announced Thursday. Garantex, a Russian-operated cryptocurrency exchange, allegedly used a series of criminals and cybercrime organizations to launder billions of dollars using hacking software, ransomware, terrorism and drug trafficking schemes, the FBI and Secret Service said. "Between April 2019 and March 2025, Gartantex processed at least $96 billion in cryptocurrency transactions," a release from the State Department said. The State Department is offering individual rewards of $5 million and $1 million for Russian national Aleksandr Mira Serda, and other Garantex leaders. The department is also targeting Grinex, a cryptocurrency exchange that was established as Garantex's successor.
Coin Geek
29-07-2025
- Business
- Coin Geek
Russia looks to Kyrgyzstan's crypto industry to evade sanctions
Getting your Trinity Audio player ready... A new report has indicated that Russian actors are using Kyrgyzstan's digital asset ecosystem to evade international sanctions and purchase dual-use goods for its ongoing war in Ukraine. According to research from U.K.-based blockchain intelligence firm TRM Labs, published in a July 21 blog post, Kyrgyzstan-registered exchanges have 'repeatedly facilitated transactions linked to sanctioned Russian entities.' It noted that 'many of these virtual asset service providers (VASPs) show indicators of being shell companies — including the reuse of identical residential addresses, founders, and contact information across multiple entities.' The report also found that several of these Kyrgyz exchanges exhibited similar on-chain heuristics to Garantex, a Russian digital asset exchange that was the subject of an international operation to disrupt its operations due to facilitating terrorist financing and sanctions violations. 'The high-risk exchange Grinex—likely a rebranded successor to Garantex—was also registered in Kyrgyzstan,' said the report. 'On-chain analysis suggests that Grinex and other Kyrgyz-based exchanges may have played a role in moving funds after the takedown, underscoring Kyrgyzstan's growing importance as a conduit for post-sanctions Russian financial activity.' TRM Labs observed increasing instances of Russia-linked actors exploiting Kyrgyz-registered exchanges to circumvent international sanctions and move funds. Some of these exchanges, said the report, 'display behavioral heuristics similar to the sanctioned Russian exchange Garantex and appear to have served as conduits for funds following law enforcement action against Garantex in 2025.' This pattern was found in several other entities as well, according to the report. Russia's route out of its sanctions hole Russia has been the subject of massive and unprecedented international sanctions since its illegal invasion of Ukraine in February 2022, making it the most sanctioned nation on Earth. With an ailing economy—some suggesting it is on the brink of collapse—and in the face of such severe restrictions as being shut out from the international financial messaging system, Society for Worldwide Interbank Financial Telecommunication (SWIFT), Russia has increasingly turned to the digital asset space for a reprieve. The appeal to a heavily sanctioned nation of being able to exchange and transfer funds instantaneously via an anonymous (or pseudonymous) and decentralized peer-to-peer network, not controlled by any antagonistic nation, is obvious. However, the ability to track and trace funds on the blockchain and the increasing legitimization of the digital asset space have made this route to international monetary freedom more difficult. Many popular exchanges and crypto-companies, such as and LocalBitcoins, and Kraken, have felt the need to comply with international sanctions against Russia, including European Union-mandated bans on all digital asset wallets, accounts, or custody services to Russian entities and accounts. Suspiciously booming Kyrgyzstan industry The TRM report noted that, since Russia invaded Ukraine, its economic ties with Kyrgyzstan have deepened significantly. While Russia-linked activity accounted for almost all of Kyrgyzstan's digital asset industry after the invasion, before February 2022, it was 'virtually nonexistent.' In January 2022, Kyrgyzstan passed digital currency-friendly legislation which, amongst other measures, recognized digital assets as property and established a registration regime for virtual asset service providers (VASP). Since then, the Central Asian Republic, formerly part of the USSR, has rapidly emerged as a crypto hub. According to TRM Labs, 'by October 2024, Kyrgyzstan had issued 126 VASP licenses, fueling a sharp rise in digital asset activity. Transaction volume by licensed VASPs surged from USD 59 million in 2022 to USD 4.2 billion in just the first seven months of 2024.' This booming industry would not be a problem, were it not for the fact that VASPs registered in Kyrgyzstan shared 'suspicious' on- and off-chain overlap with Russian entities, including identical registration addresses at private residences, phone numbers and emails tied to freight companies or other VASPs, named founders linked to multiple other providers, no discernible background in business or digital currency, and/or no functional user registration processes. As well as the example of Garantex and Grinex, the report pointed to the Kyrgyz exchange Envoys Vision Digital Exchange (EVDE), which registered a digital currency wallet address tied to the Rusich Group, a Russian paramilitary organization sanctioned by the U.S. Treasury's Office of Foreign Assets Control (OFAC) in 2022 for its involvement in the war in Ukraine. 'Beyond its on-chain exposure, the exchange also shows several off-chain links to cross-border logistics firms and a Chinese financial institution, suggesting a wider support infrastructure that warrants further scrutiny,' said TRM Labs. Plugging the hole? In terms of what can be done about this sanction loophole that Russia appears to have found, TRM Labs recommended several measures. If Kyrgyzstan is being exploited rather than complicit, the report suggested implementing stronger ownership requirements, such as mandating the physical presence or local residency of company principals, which would raise barriers for foreign bad actors. Similarly, increasing transparency around funding sources would reduce the appeal of Kyrgyzstan as a destination for shell entities.' However, if Kyrgyzstan is an equal partner in facilitating Russia's sanctions evasion, 'governments and law enforcement agencies seeking to counter Russia's sanctions evasion toolkit need to urgently engage directly with Kyrgyz authorities on compliance.' Without proactive intervention, argued the report, the model Russia has implemented in Kyrgyzstan can be easily exported: 'If left unchecked, Russia could replicate these same playbooks in neighboring jurisdictions — further weakening the global sanctions regime and enabling the continued flow of funds to fuel aggression, procurement, and destabilization.' Watch | Tech of Tomorrow: Diving into the impact of tech in shaping the future title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen=""> Garantex Kyrgyzstan Russia Sanctions SWIFT TRM Labs Ukraine
France 24
25-07-2025
- Business
- France 24
New cryptocurrency may be aiding Russia to dodge sanctions
Multiple rounds of international sanctions have been imposed on Moscow since its February 2022 invasion of Ukraine seeking to ramp up economic pressure to halt the war. But the launch of A7A5 in February this year opened up an alternative payment method for Russian businesses and individuals to sidestep sanctions when trading with foreign partners, the UK-based non-profit Centre for Information Resilience (CIR) said in a report. A7A5 is a stablecoin -- a form of cryptocurrency backed by traditional assets -- in this case pegged to the ruble, making it harder for Western authorities to monitor than dollar-based alternatives. It was launched by a pro-Russian Moldovan oligarch and a Russian state-owned bank as "the first ever ruble-pegged stablecoin," George Voloshin from anti-money laundering group ACAMS told AFP. While it is not widely used yet, experts say its creation marks a significant step in Russia's efforts to reduce its dependence on major crypto companies -- many of which cooperate with Western governments. Russian stablecoin Since Russia was kicked out of the international banking system SWIFT and hit with asset freezes and investment bans, Moscow has already turned to crypto to sidestep financial restrictions imposed by the United States and its allies. Stablecoins are especially attractive because they are less volatile than other cryptocurrencies. People have also used cryptocurrency to donate directly to both the Ukrainian army and Russian militias, according to several analytics firms such as Elliptic. But Russia has faced a problem: USDT, the most popular stablecoin, is tied to the US dollar and controlled by a company called Tether, which cooperates with US and European authorities. Earlier this year, Tether blocked $28 million in USDT held in wallets on Garantex, Russia's largest crypto exchange, which was shut down following a global crackdown on illegal transactions. "That was a real wake-up call" for Russia, said Elise Thomas, senior investigator at CIR. "It made them think that they need their own stablecoin, they need something that they control," she added. Just before Garantex was shut down, tens of millions of dollars were moved from USDT into A7A5, according to data from crypto tracking firm Global Ledger. How it works A7A5 is backed by deposits in Promsvyazbank, a Russian bank under sanctions for its ties to the government and the military. The coin is traded on Grinex, a crypto exchange based in Kyrgyzstan -- a country seen as friendlier to Russian interests and less vulnerable to Western pressure. A7A5 is also registered in Kyrgyzstan rather than Russia because the country offers a crypto-friendly legal environment and is less exposed to "sanctions and other economic pressures," project director Leonid Shumakov said in an interview posted online. Less than six months after its launch, around $150 million is now held in A7A5. These transactions are not necessarily illegal, but they could become problematic if used by sanctioned individuals or entities to reconnect with the global financial system, warned ACAMS's Voloshin. The man behind the A7 group, which developed A7A5, is Ilan Shor, a Moldovan businessman and politician now living in Russia. Investigators found links between A7A5 and Shor's political activities in Moldova, including websites related to both sharing the same IP address. These findings have suggested that the cryptocurrency could be used as a tool for political influence. Shor and his company have already been sanctioned by the UK, and more recently by the European Union, which accused them of trying to meddle in Moldova's 2024 presidential election and its referendum on joining the EU -- all while keeping close ties with Moscow.
