- U.S. sanctions target entities involved in using stablecoins to evade sanctions on Russia.
- A7 LLC and subsidiaries issue a ruble-backed stablecoin handling $1 billion daily.
- Sanctioned individuals include Sergey Mendeleev, linked to crypto exchange Garantex and payments platform Exved.
- Grinex is identified as a successor exchange facilitating these operations.
- Elliptic enhances blockchain tracking to prevent sanctioned fund transactions.
The U.S. Office of Foreign Assets Control (OFAC) has designated several businesses and individuals for involvement in evading sanctions on Russia through the use of stablecoins. Key entities placed on the Specially Designated Nationals list include firms associated with issuing and using crypto-assets to circumvent restrictions.
A7 LLC, creator of the ruble-backed stablecoin A7A5, is reported by Elliptic to have transferred approximately $1 billion daily. The company and its subsidiaries, A71 Limited Liability Company and A7 Agent Limited Liability Company, are controlled 51% by Ilan Shor, convicted in 2017 for a major banking fraud and previously sanctioned for election interference in Moldova. The other significant shareholder is Russia’s state-owned bank Promsvyazbank (PSB), known for supporting the defense sector and evading sanctions.
Old Vector LLC, based in Kyrgyzstan, issues the A7A5 stablecoin. Kyrgyzstan has a permissive legal framework for crypto businesses, unlike Russia.
The co-founder of the sanctioned crypto exchange Garantex, Sergey Mendeleev, has been linked to sanctions evasion with stablecoins like Tether’s USDT. Elliptic’s intelligence contributed to a U.S. Secret Service investigation that led to Garantex’s shutdown and froze $26 million in USDT. Mendeleev also created a ruble-backed stablecoin named “Cryptorouble” (RUBT).
Mendeleev’s company Exved facilitates cross-border payments for Russian exporters and importers under sanctions pressure, using USDT to conceal Russian business links. Exved processes transactions worth tens of billions of rubles monthly.
The Independent Decentralized Finance Smartbank and Ecosystem (Indefi Smartbank), supported by Russian oligarch Alexander Lebedev, provides technical services to Exved.
The Kyrgyzstan-based exchange Grinex, successor to Garantex, continues to facilitate exchanges involving A7A5 and USDT.
Elliptic has upgraded its blockchain analytics technology to enable identification and tracing of addresses associated with these designated entities. This measure helps users avoid processing funds tied to sanctioned individuals or businesses. For full details, see the official OFAC release here.
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