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US Treasury Targets Russian Blockchain Companies for Sanctions Evasion

On Monday, the US Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on 13 entities and two individuals. These entities and individuals are alleged to have been involved in the development of crypto-related services that could potentially aid Russian nationals in evading sanctions.

The purpose of OFAC’s designations is to hinder Russia’s utilization of the international financial system amidst its conflict with Ukraine. Brian Nelson, the Under Secretary of the Treasury for Terrorism and Financial Intelligence, emphasized in a statement that Russia is increasingly resorting to alternative payment methods to bypass US sanctions and sustain its military actions against Ukraine. Nelson stated, “The Treasury will continue to uncover and disrupt the operations of companies that assist sanctioned Russian financial institutions in reconnecting with the global financial system.”

OFAC’s regulations effectively prohibit US individuals from conducting transactions with the designated entities within the United States. Financial institutions and other entities are obligated to comply with these sanctions to avoid serious consequences. Any engagement with the sanctioned parties through transactions can result in severe penalties.

US Treasury’s Allegations Against Netex24 and Bitpapa

The newly designated entities include B-Crypto, Netex24, Tokentrust Holdings, Bitpapa, and Crypto Explorer.

According to OFAC, these listed entities were involved in the development or operation of blockchain services in Russia. OFAC alleges that Netex24 and Bitpapa utilized cryptocurrency for transactions with sanctioned banks, cryptocurrency exchanges, and darknet markets.

In a separate development, Chainalysis published a blog post providing further details on the activities of the sanctioned entities. According to the report, Netex24 and Bitpapa allegedly facilitated transactions for various pro-Russian militia and propaganda groups, including the OFAC-designated militia group known as MOO Veche.

Chainalysis also indicates that these entities operate primarily in regions such as Donetsk, Luhansk, or Crimea in Ukraine.

US Government Escalates Scrutiny on Crypto Activities

The recent action by OFAC comes amid heightened attention from the US government on the cryptocurrency sphere over the past couple of years. Notably, it has targeted cryptocurrency traders who aided North Korea’s Lazarus Group in converting substantial amounts of cryptocurrency into traditional fiat currency.

Moreover, in January, OFAC applied a fifth set of sanctions on networks linked to the Palestinian militant organization Hamas. This move was a response to Hamas’ assaults on Israel, which occurred in October of the previous year.

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