US federal lawmakers are stepping up efforts to track the potential use of cryptocurrency by Russian leaders and oligarchs to evade sweeping sanctions imposed on the country in response to its invasion of Ukraine. Economic advisers and crypto researchers have warned that bitcoin and other currencies could be used to fund Russia’s war efforts and protect the wealth of its oligarchs.
In a letter To Treasury Secretary Janet Yellen on Wednesday, a group of senators, including Elizabeth Warren and Senate Intelligence Committee Chairman Mark Warner, asked about the agency’s plans to monitor crypto networks for evidence that Russian leaders are transferring money and to enforce compliance with sanctions. “Criminals, rogue states and other actors may use digital assets and alternative payment platforms as a new means of concealing cross-border transactions for nefarious purposes,” the senators wrote, citing Treasury’s own information. report 2021 who warned of the ability of crypto to undermine the effectiveness of US sanctions.
Last year, the Treasury’s Office of Foreign Assets Control (OFAC) released guidance to assess and mitigate the risks that crypto markets pose to sanctions. A OFAC report asked tech companies and crypto users to opt out of engaging in “dealings with blocked people or property.”
This new letter reiterates those same concerns and specifically asks how OFAC works with foreign governments to enforce its guidelines and what obstacles have prevented it from doing so.
At the same time the letter was sent, US Attorney General Merrick Garland announced the creation of a new interagency task force, KleptoCapture, which will focus on enforcing the sanctions and other economic restrictions that the United States imposed on Russia. “The task force will be fully empowered to use the most advanced investigative techniques,” such as cryptocurrency tracing, to arrest and prosecute those found in violation, the advert noted.
While these coincident announcements do not appear to be a joint effort, together they mark the most official attempt to investigate the role of crypto networks in Russia’s attack on Ukraine.
Last week, Ukraine asked crypto exchanges to block all Russian accounts. “It is crucial not only to freeze addresses linked to Russian and Belarusian politicians, but also to sabotage ordinary users,” said Mykhailo Fedorov, Ukraine’s minister of digital transformation. tweeted on Sunday.
So far, the crypto industry has largely ignored or sentenced calls for freezing Russian assets. Changpeng Zhao, founder of the world’s largest crypto exchange, Binance, told BBC Radio 4 that the company was “unable to sanction, for example, populations of people,” and said Binance would only respond to requests about specific individuals. Another great exchange, Coinbase, tell the motherboard that it will not comply with Ukraine’s request in the interest of “economic freedom”.
Bloomberg reported that the White House National Security Council and the Treasury Department have also asked the exchanges to help them in their efforts. And while crypto networks seem unilaterally opposed to blanket bans, companies like Coinbase are working with the Biden administration to freeze the accounts of sanctioned Russians.
