The US Treasury Department has listed Russian cryptocurrency mining service provider BitRiver and several affiliates as companies that facilitate the evasion of sanctions imposed on the country.
On Wednesday, the Treasury Department’s Office of Foreign Assets Control (OFAC) announced that it was taking action against BitRiver AG and 10 of its Russia-based subsidiaries, naming them “Specially Designated Nationals”. Companies and individuals on the OFAC list have their assets blocked and “US persons are generally prohibited from doing business with them.”
According to the US Treasury, the actions against BitRiver and its subsidiaries were based on allegedly facilitating “sanctions evasion for Russian entities,” hinting that cryptocurrency may have played a role in helping the Russian government circumvent the measures. US economic levels leveled off in response to Ukraine invasion. The government department said BitRiver operated server farms that sold cryptocurrency mining capacity internationally, helping Russia “monetize its natural resources.”
“Russia has a comparative advantage in cryptocurrency mining due to energy resources and a cold climate,” the Treasury said. “However, mining companies rely on imported IT equipment and fiat payments, making them vulnerable to sanctions. The United States is committed to ensuring that no asset, no matter how complex, becomes a mechanism for the Putin’s regime offsets the impact of sanctions.
Today, the US is targeting Russian financial and operational support networks that attempt to evade international sanctions.https://t.co/a59UJKRaQJ
— Treasury Department (@USTreasury) April 20, 2022
The latest sanctions came after OFAC warned US residents not to use digital assets to benefit certain entities and individuals based in Russia. In April, the government department announced that it had targeted the Russian darknet market Hydra, and virtual exchange Garantex, for their alleged connections to payments for ransomware attacks and other cybercrimes.
“Treasury can and will go after those who evade, attempt, or help evade US sanctions against Russia, as they are aiding Putin’s brutal war,” said Brian Nelson, deputy secretary of the office of terrorism and financial intelligence.
Before the invasion of Ukraine, Russia’s central bank proposed a ban on cryptocurrency mining, but President Vladimir Putin said at the time that the industry had an advantage in the country due to “surplus electricity and well-trained personnel.” Alexei Yakovlev, director of the financial policy department of the Russian Ministry of Finance, has since suggested that the government support industrial-scale cryptocurrency mining in the country and that “it probably doesn’t make sense to ban mining at home.”
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