Russian oligarchs and officials are reportedly using crypto to protect millions from sanctions

• Blockchain security firm Elliptic has tracked down a crypto wallet with millions of dollars that belong to sanctioned leaders in Russia.
• Its investigation shows that there was a jump in ruble-related activity on privacy-based blockchain platforms a week before the conflict between Russia and Ukraine broke out.
• The company did not share the exact amount of holdings but have shared the relevant details with the authorities.

Sanctions may have thrown Russian businesses for a loop, but leaders of the country are reportedly using cryptocurrency to bypass the recent sanctions against the country.

Blockchain analysis firm Elliptic has tracked down a crypto wallet, which has ‘significant asset holdings’. In an interview with Bloomberg, the co-founder – Tom Robinson – revealed that the wallet likely contains millions of dollars that belong to sanctioned Russians officials and oligarchs.

The exact value or the nature of the crypto assets has not been revealed by the company, but they claim to have shared the information with the relevant authorities.

Not everyone is complying with Russia’s sanctions

Mainstream crypto players, like Coinbase and Binance, have complied with the regulator's requests and cracked down on transactions originating out of Russia. However, there are still more than 400 crypto services in the world that let anonymous users trade digital assets using Russia’s native currency, the ruble.

According to Elliptic, a week before the conflict between Russia and Ukraine broke out, ruble-related activity on some of these services – like Tornado Cash – was seen surging. Tornado Cash has declined to restrict services or comply with the sanctions and continues to anonymise transactions in Ethereum.

And ruble-related activity on some of these services was seen surging a week before the war between Ukraine and Russia broke out.

Russia’s crypto lifeboat

Russia is the third largest Bitcoin mining nation in the world. So, the fact that cryptocurrencies could be used as a vehicle to bypass sanctions on Russia has been a concern from the get go.

According to a report by the Wall Street Journal last month, the White House is cognizant of crypto’s potential impact and has contemplated levying sanctions specifically on Russia’s access to Bitcoin and other cryptocurrencies. This after already having slapped sanctions on Russian President Vladmir Putin, his inner circle, and the country’s financial system.

More recently, the chair of the US Federal Reserve, Jerome Powell, also highlighted concerns that cryptocurrency could weaken sanctions.

According to Robinson, while there is a crypto wallet out there with millions of dollars of illicit funds, the overall level of sanction compliance is very high. He also highlighted that crypto is highly traceable because it’s all on a public ledger. “Crypto can and will be used for sanctions evasion, but it’s not the silver bullet,” he told Bloomberg.

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