The US Treasury Department's Office of Foreign Assets Control (OFAC) has imposed sanctions on a network of companies, exchanges, and executives connected to the now-defunct Russian cryptocurrency exchange Garantex and the rouble-backed stablecoin A7A5, alleging their involvement in helping Russia circumvent international sanctions. Garantex, which was established in 2019 and previously licensed in Estonia, reportedly processed transactions exceeding $100 million linked to ransomware and darknet activities, according to OFAC.
Following a joint operation with German and Finnish law enforcement, US officials seized Garantex's web domain and froze $26 million in assets in March, prompting the creation of its successor, Grinex, to continue operations. OFAC claims that Grinex transferred customer funds from Garantex and utilized the A7A5 token to restore access after the seizures.
The A7A5 token, issued by Kyrgyzstan-based firm Old Vector, was designed for Russian users of A7 LLC, a cross-border settlement platform, and is backed by Russia's state-owned Promsvyazbank (PSB) and Moldovan politician Ilan Shor. As a result, OFAC has sanctioned Old Vector, A7 LLC, and its subsidiaries, effectively blocking them from the US dollar-based financial system and prohibiting US entities from interacting with these entities or associated crypto addresses.
Key Garantex executives, including Sergey Mendeleev, Aleksandr Mira Serda, and Pavel Karavatsky, have also been sanctioned, along with Mendeleev's firms InDeFi Bank and Exved, for allegedly enabling sanctioned Russian businesses to trade through cryptocurrency channels. The US Treasury Department's action, coordinated with the US Secret Service and the FBI, aims to disrupt digital asset channels used for ransomware and sanctions evasion.
Under Secretary of the Treasury for Terrorism and Financial Intelligence John K. Hurley stated that exploiting cryptocurrency exchanges for money laundering and ransomware attacks not only poses a threat to national security but also damages the reputation of legitimate virtual asset service providers. The A7A5 token has experienced significant growth this year, processing approximately $1 billion daily by July, according to blockchain analytics firm Elliptic.
Chainalysis estimates that the token's cumulative transaction volume has exceeded $51 billion, warning that it provides a new avenue for bypassing sanctions against Russia.