The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned three cryptocurrency exchanges for providing services used to evade economic restrictions imposed on Russia following its invasion of Ukraine in early 2022.
This includes Bitpapa IC FZC LLC, Crypto Explorer DMCC (AWEX), and Obshchestvo S Ogranichennoy Otvetstvennostyu Tsentr Obrabotki Elektronnykh Platezhey (TOEP).
In all, the designations cover thirteen entities and two individuals operating in the Russian financial services and technology sectors.
Bitpapa, which offers virtual currency exchange to Russian nationals, has been accused of facilitating transactions worth millions of dollars with sanctioned Russian entities, Hydra Market and Garantex.
Crypto Explorer offers currency conversion services between virtual currencies, rubles, and UAE dirhams. AWEX offers cash services at its offices in Moscow and Dubai and also loads funds onto credit cards associated with OFAC-designated Russian banks such as Sberbank and Alfa-Bank.
Another virtual currency exchange run by TOEP was also sanctioned which is alleged to have enabled digital payments in rubles and virtual currencies to sanctioned entities such as Sberbank, Alfa-Bank, and Hydra Market.
Hydra Market was the world’s largest darknet market, a Russian dark web platform for selling drugs and money laundering that had a turnover of $1.35 billion in 2020, 19,000 registered seller accounts, and served at least 17 million customers worldwide.
Hydra also offered stolen databases, forged documents, and hacking-for-hire services. In April 2022, the German police seized Hydra Market’s servers in a joint action with the United States and 543 bitcoins from its profits.
The penalty list also features Moscow-based fintech companies such as B-Crypto, Masterchain and Laitkhaus, which have partnered with sanctioned Russian banks to issue, exchange, and transfer cryptocurrency assets.
Besides all properties and interests in the U.S. connected to designated individuals and entities will be frozen. Furthermore, entities at least 50% owned directly or indirectly by one or more blocked persons will also be blocked.
Russia is increasingly turning to alternative payment mechanisms to circumvent U.S. sanctions and continue to fund its war against Ukraine. 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.
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