On April 20, the United States added a new round of sanctions against Russia, imposing sanctions targeting a Russian bank, a cryptocurrency mining company and a network of individuals who are accused of facilitating illicit transactions. The measures represent a further step towards cutting off Russian access to international channels for transferring value that could be used to evade U.S. sanctions imposed through restrictions on SWIFT, correspondent banking, asset freezes, and other traditional financial instruments and established channels for the international financial system. These measures also mark the first ever sanctions against a crypto mining company.
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated entities and individuals involved in attempts to evade sanctions imposed by the United States and its international partners on Russia. OFAC designated Russian commercial bank, Transkapitalbank, and a global network of more than 40 individuals and entities led by U.S.-designated Russian oligarch Konstantin Malofeyev. OFAC also designated Moscow-based bitcoin miner BitRiver, which operates a data center in Siberia, and 10 Russia-based subsidiaries of BitRiver’s holding company.
Treasury’s announcement of the sanctions made clear that the first-of-its kind crypto mining sanctions are designed to deter Russia’s ability to monetize its natural resources through crypto mining. “By operating vast server farms that sell virtual currency mining capacity internationally, these companies help Russia monetize its natural resources,” Treasury’s announcement said. Russia, which has a comparative advantage with respect to crypto mining because of its cold climate and significant energy resources, is reportedly the third largest crypto mining country in the world. Treasury’s announcement further stated, “The United States is committed to ensuring that no asset, no matter how complex, becomes a mechanism for the Putin regime to offset the impact of sanctions.”
The authors of this post are: Mike Lowell, Mark Bini and Julia Nestor.