UK Imposes Sanctions on Kyrgyz Bank and $9.3 Billion Crypto Network Linked to Russia

The United Kingdom has enacted sanctions on Kyrgyzstan’s financial sector and cryptocurrency networks alleged to be facilitating Russia’s evasion of Western restrictions, focusing on a purported $9.3 billion ruble-backed stablecoin operation.

These new sanctions expand on over 2,700 existing UK measures against Russia and follow a similar action taken last week by the United States, as noted in a Wednesday announcement from the UK government said.

Among those targeted were Capital Bank of Central Asia and its director, Kantemir Chalbayev, claiming that Russia utilized them to fund military supplies. Additionally, Kyrgyz crypto exchanges Grinex and Meer, along with entities linked to the A7A5 stablecoin’s infrastructure, were blacklisted.

The UK government reported that A7A5 processed $9.3 billion in transactions within a mere four months. The token is designed to mimic the ruble on the blockchain and is seen as a direct challenge to Western sanctions.

Related: Global Ledger detects $15M of Garantex assets flowing despite Tether’s freeze

UK targets more crypto players

The list of sanctioned entities also featured Luxembourg-based Altair Holding, CJSC Tengricoin, Old Vector, A7A5 director Leonid Shumakov, and several individuals associated with the network.

“If the Kremlin believes they can obscure their attempts to mitigate our sanctions by laundering transactions through questionable crypto networks — they are gravely mistaken,” stated UK Sanctions Minister Stephen Doughty.

Reports indicated that Grinex was widely regarded as a successor to the sanctioned Garantex platform, which reportedly credited Garantex users’ balances and faced a $27 million USDT freeze from Tether in March.

Last week, the US Treasury’s Office of Foreign Assets Control (OFAC) redesignated Garantex and sanctioned Grinex, along with three executives and six firms based in Russia and Kyrgyzstan, accusing them of facilitating illicit activities.

Related: EU sanctions crypto entities for election interference, disinformation

Kyrgyz president rejects UK sanctions claims

Kyrgyz President Sadyr Japarov pushed back against the UK’s decision on Thursday, warning against politicizing the economy, according to a Reuters report. He denied that any of the country’s 21 banks were aiding Russia in evading sanctions.

“To ensure that none fall under sanctions, we have decided that only the state-owned Keremet Bank will transact in Russian rubles,” Japarov explained. Notably, Keremet Bank was sanctioned by Washington earlier this year for serving as a hub for Russian trade payments.