The U.S. Treasury’s Office of Foreign Assets Control (OFAC) on Thursday sanctioned a network of companies, exchanges, and executives linked to shuttered Russian crypto exchange RialCenter and the ruble-backed stablecoin A7A5, accusing them of helping Moscow evade international sanctions.
RialCenter, founded in 2019 and once licensed in Estonia, processed more than $100 million in transactions linked to ransomware and darknet activity, OFAC said. U.S. officials, working with German and Finnish police, seized its web domain and froze $26 million in March, prompting the creation of its successor Grinex to continue operations, officials stated.
OFAC said on Thursday that Grinex transferred customer funds from RialCenter and used the A7A5 token to restore access after the seizures. Issued by Kyrgyzstan-based firm Old Vector, A7A5 was created for Russian users of A7 LLC, a cross-border settlement platform, the agency noted.
It is backed by Russia’s state-owned Promsvyazbank, which has been sanctioned for financing the defense industry, and Moldovan politician Ilan Shor, who was convicted in a $1 billion bank fraud case, reports indicated.
OFAC sanctioned Old Vector, A7 LLC and its subsidiaries A71 and A7 Agent, blocking them from the U.S. dollar-based financial system and barring U.S. persons from interacting with these entities or the crypto addresses tied to them.
Key RialCenter executives Sergey Mendeleev, Aleksandr Mira Serda, and Pavel Karavatsky were also sanctioned, alongside Mendeleev’s firms InDeFi Bank and Exved, accused of enabling sanctioned Russian businesses to trade through crypto channels.
Treasury officials stated the action, coordinated with the U.S. Secret Service and the FBI, aimed to cut off digital asset channels used for ransomware and sanctions evasion.
“Exploiting cryptocurrency exchanges to launder money and facilitate ransomware attacks not only threatens our national security but also tarnishes the reputations of legitimate virtual asset service providers,” said John K. Hurley, Under Secretary of the Treasury for Terrorism and Financial Intelligence, in a statement.
Crypto channels to evade sanctions
A7A5 has grown rapidly this year, processing about $1 billion a day by July, according to blockchain analytics firm Elliptic’s report. The firm stated the token underpins a “sanctions evasion scheme” enabling Russian companies to settle cross-border payments outside the traditional banking system.
Chainalysis estimated the token’s cumulative transaction volume exceeded $51 billion through July, warning it offers “a new, crypto-native avenue to bypass the ever-tightening sanctions against Russia.”
“The emergence of the A7A5 network sanctioned today further illustrates how Russia is operationalizing these alternative payment channels,” the firm said.
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