The US Department of the Treasury has announced a new package of sanctions targeting a network of companies and wallets associated with the closed Russian crypto exchange Garantex and the A7A5 stablecoin.
Garantex and Grinex
According to the announcement, Garantex, established in 2019 and once licensed in Estonia, carried out over $100 million in transactions related to ransomware attacks and illicit digital activities. In collaboration with German and Finnish police units, US authorities seized Garantex’s web domain in March and froze $26 million.
Immediately after Garantex ceased operations, a new entity emerged under the name Grinex. The sanctions announcement alleged that Grinex took over customer funds from Garantex and utilized the A7A5 token to grant users access to their assets once more.
A7A5 Stablecoin
The A7A5 stablecoin was developed for Russian users by the Kyrgyzstan-based company, Old Vector. According to OFAC, it was supported by Russia’s State Bank Promsvyazbank (PSB) and implicated Moldovan politician Ilan Shor. PSB had previously been subject to sanctions regarding defense industry financing.
Under the sanctions, Old Vector, A7 LLC, and its affiliates A71 and A7 Agent were banned from conducting transactions in US dollars, and US citizens were prohibited from engaging with these entities or associated crypto wallets.
Sanctions and Cryptocurrencies
According to blockchain analysis firm Elliptic, by July, the A7A5 token reached $1 billion in daily transactions, allegedly facilitating cross-border payments for Russian companies without using traditional banking mechanisms.
Another analysis firm, Chainalysis, reported that the total transaction volume of the A7A5 token surpassed $51 billion by the end of July, suggesting that this facilitated sanction evasion for Russia. The firm emphasized that the A7A5 network was shaped considering 'Russia’s search for alternative payment paths.'
The sanctions imposed by the US Treasury aim to stop Russia from circumventing sanctions through cryptocurrency channels, thereby isolating involved individuals and entities from the global financial system.
The sanctions against Garantex and related entities highlight the US government's efforts to isolate Russian cryptocurrency networks from the global financial system, preventing the use of cryptocurrencies for financing prohibited activities.
