U.S. Sanctions Watchdog Alleges Russia-Linked Crypto Wallet Processed $5M

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) rolled out a new massive wave of sanctions against Russian industrial companies, as well as people and entities that helped Russia move money while the country has been waging war in Ukraine.

Among the 22 individuals and 104 entities in the sanctions list published Friday, there is one cryptocurrency wallet, first spotted by the blockchain intelligence company Elliptic. The wallet on the Ethereum blockchain belongs to a 48-y.o. United Arab Emirates resident from Ireland, John Desmond Hanafin, according to OFAC.

A wallet related to a company he led, according to the blockchain data, received over $5.2 million in the tether stablecoin (USDT) since the beginning of the war.

According to OFAC, Hanafin helped high-net-worth Russian citizens obtain passports from other countries, as well as move money across borders while Russia has been cut off from major global payment networks by previous sanctions.

As a chief executive officer of Huriya Private FZE LLE, an UAE-based private equity and corporate structuring entity, Hanafin helped moving money from Russia into the UAE, using his firm as intermediary, the OFAC press release said. To launch the operations in the UAE, Hanafin worked together with Yulia Sergeeva, employee of a Moscow-based investment banking firm Aquila Capital Group, which also is under sanctions now.

It’s not clear for what purposes Hanafin and his company used crypto. The wallet designated by OFAC received a bunch of large transactions since Feb. 2022, one for as much as 1,132,000 USDT. Most of the money sent to the wallet came from centralized exchanges like Binance, Huobi, OKX and the now-bankrupt FTX, according to the data on Etherscan.

OFAC also sanctioned Cryptovenience and CryptAnet, firms controlled by a Swiss national Anselm Oskar Schmucki.

“Schmucki controls a global network of shell companies and has had close financial relationships with an individual charged with financial crimes and a company with suspected links to Russian organized crime and money laundering,” OFAC press release said.

Cryptovenience is an Estonian entity offering plastic cards for storing and spending cryptocurrencies. CryptAnet is in the business of wholesale of metals and metal ores, according to Estonian business registry data.