Treasury Department Russia avoid sanctions using crypto

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President of Russia Vladimir Putin A Treasury official told lawmakers that cryptocurrencies could be used to evade US and other sanctions aimed at the Kremlin for its gratuitous invasion of Ukraine.

“Yes, Senator, it’s possible,” Elizabeth Rosenberg, Assistant Secretary of the Treasury for Terrorism and Financial Crimes Financing, said when Sen. Elizabeth Warren, D-Mass, asked her if whether digital assets can be used to avoid sanctions.

The Senate Committee on Banking, Housing and Urban Affairs convened a hearing to discuss next steps to prevent further Russian aggression against Ukraine, such as asset confiscation. from Russian oligarchs and the G7 deal to Russian oil price limit.

Warren said she has been concerned about the possibility of cryptocurrencies being used by Russian elites to bypass sanctions since the country invaded in February.

“We knew back then that countries like North Korea were using crypto to get around sanctions and launder at least hundreds of millions of dollars. And Russia could easily be a part of that,” Warren said. that number”.

The Treasury Department has determined Russian entity trying to get around sanctions with cryptocurrencies. Twenty-two individuals and two entities, including a neo-Nazi paramilitary group, were designated this month for helping Russia digitally fund the Ukraine war.

In April, the agency targeted virtual currency mining agency for the first time, together with financier Konstantin Malofeyev, the private commercial bank Public Joint Stock Company Transkapitalbank and 40 other individuals and organizations led by Malofeyev.

Darknet Market Hydra and Garantex, a virtual currency exchange based in Russia, were also sanctioned that month in part to cut off avenues for evading potential sanctions.

The US government has blocked access to all of its assets that are based in the US or held by someone residing in the US Treasury Department also blocked transactions between sanctioned persons. fines and to anyone in the United States.

But Russia planned ahead by developing digital currency at the beginning of February in the hope of trading directly with countries that accept the money without first converting to dollars. The country also developed tools to conceal the origin of transactions as cryptocurrency exchanges can be tracked on the underlying blockchain.

Rosenberg confirmed that anonymity-enhancing technologies and other tools used to conceal digital transactions could interfere with sanctions enforcement. Treasury issued it sanctions for the first time on these “mixers” in May and sanction another, “Cash Tornado,” in August.

Warren mentioned that Coinbase, a leading US cryptocurrency exchange, has filed an application litigation this month against the Treasury Department on behalf of Tornado Cash users.

Coinbase’s chief legal officer, Paul Grewal, told CNBC that the sanctions set “a dangerous precedent,” but Rosenberg called them effective.

“When they can be used to stop any criminal (who) wants to use the mixer to launder money, proceeds of corruption or any criminal activity, that is an effective avenue that we can use to signal that we say Rosenberg.

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