The United States Treasury has shut down two Russia linked cryptoasset exchanges due to their role in providing money laundering services for cybercrime and fraud.
Late last month, the treasury’s Office of Foreign Assets Control (OFAC) placed sanctions on Cryptex, a crypo-exchange registered in Saint Vincent and the Grenadines, for helping Russian hackers launder over USD$51 million in crypto snatched in ransomware attacks.
In so doing, OFAC listed four cryptoasset addresses bleonging on the Specially Desiganted Nationals and Blocked Persons (SDN) List. In addition to the sanction, OFAC also added Sergey Sergeevich, Cryptex’s owner, to the SDN list.
As a result of OFAC sanctions, US persons, including cryptoasset exchanges, are prohibited from transacting with Cryptex or Sergeevich. On the same day, the US Treasury’s Financial Crimes Enforcement Network (FinCEN) designated another Sergeevich-linked crypto exchange, PM2BTC, as a “primary money laundering concern” under Section 9714 of the Combating Russian Money Laundering Act.
FinCEN stated that PM2BTC facilitates crypto-to-ruble trading for ransomware attackers and other cybercriminals in Russia, and has conducted business for other US-sanctioned cryptoasset exchanges linked to Russia. With this designation, FinCEN imposed a special measure that bars US covered financial institutions from conducting certain transactions with PM2BTC.
OFAC and FinCEN’s joint action is part of the US government’s ongoing effort to dismantle the money laundering networks supporting Russia’s cybercrime ecosystem.
The agency had previously sanctioned several Russian cryptoasset exchanges. For example, Garantex, which it designated in April 2022 for facilitating money laundering, is linked to ransomware campaigns.
In January 2023, FinCEN identified Bitzlato, a Russia-linked exchange, as handling hundreds of millions of dollars for hackers.
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Hackers stole over USD$1.5B in crypto in 2024
Cryptoasset exchanges and financial institutions can use blockchain analytics to screen for transactions linked to Cryptex and PM2BTC, ensuring compliance with the recent OFAC and FinCEN measures.
Blockchain analytics firm, Elliptic, has also identified thousands of additional addresses associated with Cryptex and PM2BTC.
Elliptic’s customers can screen for potential exposure to these addresses to stay compliant with the newly imposed measures.
Cybercriminals stole over USD$1.58 billion in cryptocurrency in the first seven months of 2024, according to blockchain analytics firm, Chainanalysis.
This amount represents an 84 per cent increase compared to the same period in 2023. Additionally, ransomware payments have become a major issue, with over USD$1 billion in ransoms paid in 2023. This year has already seen nearly USD$460 million in ransomware payments and is expected to surpass 2023’s numbers.
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