U.S. Sanctions Crypto Entities Linked to Ruble-Backed Stablecoin and Closed Exchange

Overview

The U.S. Treasury’s sanctions enforcement body has targeted a series of companies and individuals associated with the Russian ruble-pegged stablecoin A7A5 and the now-defunct exchange Garantex, accusing them of aiding the evasion of international sanctions.

Key Facts:

Garantex allegedly facilitated over $100 million in illegal transactions before its closure, which prompted the establishment of Grinex to continue its operations.
The A7A5 token was reportedly sanctioned Russian institutions and was used to circumvent global sanctions, with a staggering $1 billion in daily transactions.

Background

The Treasury Department’s Office of Foreign Assets Control (OFAC) announced on Thursday the imposition of sanctions against a network linked to Garantex and the A7A5 stablecoin, claiming these entities facilitated violations of U.S. sanctions.

Garantex, established in 2019 and licensed in Estonia, processed illicit transactions allegedly tied to ransomware and the darknet. Following coordination with German and Finnish authorities, law enforcement seized Garantex’s domain and froze $26 million in assets earlier this year, leading to Grinex’s formation.

Details

OFAC’s notifications revealed that Grinex moved funds from Garantex and continued to use the A7A5 token after the domain seizure. A7A5 was created for Russian users of the A7 LLC platform, branching from a Kyrgyzstan-based company.

This token is underwritten by sanctioned entities such as Promsvyazbank, associated with financing Russia’s defense sector, and Ilan Shor, a Moldovan politician implicated in significant bank fraud.

Furthermore, OFAC sanctioned Old Vector, A7 LLC, and their subsidiaries, prohibiting them from engaging with the U.S. financial system along with blocking numerous crypto addresses tied to them.

Garantex’s key figures such as Mendeleev, Serda, and Karavatsky were also sanctioned, drawing attention to their roles in facilitating operations for sanctioned Russian businesses through cryptocurrency.

Conclusion

As part of ongoing efforts to obstruct digital channels used for ransomware and sanctions evasion, Treasury officials reaffirmed their commitment to combating the exploitation of cryptocurrency for illegal activities. “Utilizing cryptocurrency platforms for laundering proceeds from crime poses risks not just to national security but also to the integrity of legitimate financial service providers,” stated John K. Hurley, Under Secretary of the Treasury for Terrorism and Financial Intelligence.