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Sanctioned Russian entities are increasingly leveraging digital assets to circumvent traditional financial exclusion and maintain commercial operations, according to recent analysis. This shift underscores a growing trend of utilizing cryptocurrencies to navigate restrictive economic measures.
A detailed examination of leaked transaction data reveals that state-affiliated companies and Kremlin associates have processed over $8 billion in cryptocurrency transfers within the last eighteen months. Central to these transactions is A7, a payment provider with partial ownership by Promsvyazbank, a financial institution long associated with Russia’s defense industry.
The analysis highlights stablecoins, predominantly Tether’s USDT, as the foundational element for A7’s cross-border payment infrastructure. Oversight of these operations is reportedly directed by Moldovan businessman Ilan Shor, who faces U.S. sanctions due to his alleged close ties to Vladimir Putin. Shor has previously claimed that A7 facilitated approximately $90 billion in payments in under a year, with a significant portion routed through Asian partners.
However, this strategy has encountered challenges. Tether’s proactive stance in freezing sanctioned wallets became prominent after regulators targeted the Russian exchange Garantex, seizing $26 million in USDT. In response, Shor’s network initiated the A7A5 stablecoin, pegged to the Russian ruble, aiming to reduce reliance on foreign issuers.
While the A7A5 token faces liquidity constraints, with less than $500 million in circulation, it is estimated by Elliptic to be connected to transactions in the tens of billions. This development, according to the firm, exemplifies how sanctioned networks are exploring alternative payment channels to mitigate the impact of Western restrictions, even as adoption remains inconsistent.
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Blockchain developer and writer, Daniel combines hands-on coding experience with accessible storytelling. He holds multiple blockchain certifications and authors technical explainers, protocol deep-dives, and developer tutorials to help readers navigate the intersection of code and finance.