13 cryptocurrency companies exposed for helping Russia circumvent sanctions related to digital assets

On Monday, March 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) imposed sanctions on 13 companies and two anonymous individuals for creating cryptocurrency services that could potentially help Russian citizens avoid sanctions due to full-scale military aggression against Ukraine.

Many of those sanctioned offered services or facilitated transactions to help citizens of the aggressor state evade sanctions, OFAC said in a statement.

«Russia is increasingly turning to alternative payment mechanisms to circumvent U.S. sanctions and continue to fund its war against Ukraine,» said Brian Nelson, U.S. Under Secretary for Terrorism and Financial Intelligence.

Nelson added that the Treasury will continue to expose and disrupt companies that allow sanctioned Russian financial institutions to reconnect to the global financial system.

In its turn, blockchain analytics company Chainalysis said in its blog that there are at least two firms that facilitated significant cryptocurrency transfers to sanctioned groups. These two firms are Netex24 and Bitpapa.

According to experts, Netex24 facilitates cryptocurrency services for sanctioned Russian banks (the report mentions Tinkoff and Sberbank). On the other hand, Bitpapa operates a peer-to-peer (P2P) cryptocurrency exchange platform open to Russian citizens.

According to Chainalysis, a significant share of the outflow of funds from Netex24 and Bitpapa to illegal services is accounted for by the darknet markets. «The amount of money that Netex24 and Bitpara transferred to sanctioned entities and darknet markets has been steadily increasing since the beginning of Russia’s war in Ukraine,» Chainalysis said in its report.

As a reminder, yesterday it became known that the CommEX cryptocurrency exchange was shutting down its operations. In September 2023, CommEX acquired the Russian business of the Binance crypto exchange after it decided to leave the territory of the aggressor country. The migration process between the platforms was supposed to take about a year. As of January 2024, the number of CommEX users exceeded 400,000. About 85% of customers were from Russia.