As a reminder, a host of sanctions have been imposed on Russia since February 24, 2022, making it the country of record in this regard. With this in mind, many experts are worried about the prospect of circumventing restrictions with decentralised assets that cannot be blocked and restricted - unless we are talking about centralised platforms like exchanges.

However, there is still no consensus on the issue. In particular, many experts call the scenario of mass use of crypto to circumvent sanctions unrealistic. The day before, such a viewpoint was expressed by FBI Chief Christopher Wray. He stated that the US knows how to effectively block interaction with certain crypto-addresses, so it is unlikely that anyone will successfully link to the coins. Read more about his remarks in a separate piece.


Sanctions and cryptocurrencies

Elliptic clarified that the aforementioned addresses do not necessarily belong to entities or individuals on sanctions lists. However, these are cryptocurrencies “that could be linked to these entities as a result of the analysis”. The experts also did not specify exactly when these entities were sanctioned. Accordingly, it may not be the most recent restrictions, but also earlier ones.

In addition, analysts identified more than 400 virtual asset service providers (VASPs), most of which are cryptocurrency exchanges or digital platforms that allow the purchase of cryptocurrencies for the Russian ruble. Here is their cue with which experts outline the problem.

Most of these services are unregulated and can be used anonymously.

In addition to certain sectors of the economy, sanctions have also affected high-ranking individuals from the Russian Federation

On top of all this, Elliptic said it had identified more than 15 million addresses linked to “criminal activity in Russia”. Crypto-addresses that could in any way be linked to Russian oligarchs or officials are also under constant monitoring.

As we have noted, many experts have previously expressed concern about the fact that the Russian Federation could allegedly circumvent sanctions by using cryptocurrencies. However, some cryptocurrency platforms have also taken the initiative to search for such accounts and block them on their own. Last week, for example, Coinbase reported blocking more than 25,000 accounts.

Is such a scenario possible according to Elliptic representatives? David Carlyle, the company’s director of policy and regulation, shared his thoughts on the matter in an email to Decrypt reporters. Here’s his rejoinder.

Cryptocurrencies cannot contribute to the massive sanctions evasion that it would take for Russia to fully close the hole in the economy created by harsh external pressure. The total assets of Russian banks hit by US sanctions are roughly equivalent to the entire market capitalisation of cryptocurrencies. The cryptosphere simply cannot provide the scale of transactions Russia needs to circumvent sanctions.

Nevertheless, Carlyle believes that individuals and organisations within the Russian Federation will still “inevitably” attempt to use cryptocurrencies to raise funds and evade sanctions on a limited scale. There are several specific ways in which individuals or entities associated with the Russian Federation could use crypto for the aforementioned purposes.

Legalisation of crypto in the face of Russian sanctions is also unlikely to occur

The first of these is the use of ransomware. In 2021 alone, cryptocurrency ransomware became one of the biggest sources of revenue for Russian cybercriminals. The closest example for such a scenario is North Korea. Because of the world’s isolation, local hackers are quite successful at supplementing their budgets through ongoing cyberattacks.

The second option is extended cooperation with cryptocurrency exchanges, which, for one reason or another, failed to block sanctioned users. An example of such a platform is the crypto exchange SUEX, which Carlyle himself mentioned during a recent webinar. Here is his quote.

We’ve seen cases before where crypto exchanges and exchanges have been implicated in allowing Russian criminals to launder large amounts of money.

In September 2021, the US Treasury Department’s Office of Foreign Assets Control imposed sanctions on SUEX as being responsible for activities against US interests. However, in addition to SUEX, individuals or organisations in the Russian Federation may find additional loopholes in circumventing sanctions – but only on a small scale. Because of the transparency of blockchains and the high activity of those who track transactions, it is virtually impossible to “pull off” a major sanctions evasion.


We believe there is no point in worrying about a possible large-scale circumvention of restrictions. Still, large-scale crypto transactions would require identity verification, and banks could have questions. Finally, the scale of the digital asset niche may not be sufficient for regular large-scale transactions between countries. And bans on transactions with certain addresses by foreign governments are also an effective safeguard.