US Alleges 5 Russian Nationals Used Crypto as Part of Sanctions Evasion, Smuggling Scheme

Defendants allegedly laundered "millions of dollars" using Tether.

AccessTimeIconOct 19, 2022 at 6:17 p.m. UTC
Updated Oct 20, 2022 at 3:19 a.m. UTC

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.

Federal prosecutors alleged that five Russian nationals laundered "millions of dollars" worth of cryptocurrency as part of a scheme to smuggle military technology and oil.

Yury Orekhov, Artem Uss, Svetlana Kuzurgasheva (also known as “Lana Neumann”), Timofey Telegin and Sergey Tulyakov are being charged with attempting to evade sanctions against Venezuelan oil producers and obtaining technology used in the U.S. F-22, an air superiority fighter. The defendants allegedly used shell companies and cryptocurrencies to launder the funds involved in this scheme, though a Department of Justice press release did not specify the amounts or types of cryptocurrency used.

An indictment published later in the day suggested the defendants looked to the tether stablecoin for a transaction.

Defendants Orekhov and Uss were arrested on Monday, according to the press release. The charges were brought by Task Force KleptoCapture, a DOJ initiative focused on sanctions and economic countermeasures focused on Russia after the nation invaded Ukraine.

U.S. Attorney Breon Peace for the Eastern District of New York said the defendants "were criminal enablers for oligarchs, orchestrating a complex scheme to unlawfully obtain U.S. military technology and Venezuelan sanctioned oil through a myriad of transactions involving shell companies and cryptocurrency" in a statement.

Andrew Adams, the director of Task Force KleptoCapture, echoed the sentiment in his own statement.

“Stamping out evasion of export controls on military technology is among the Task Force’s highest priorities, and today’s arrests reflects the power of those controls when enforced by a dedicated team of expert agents and devoted foreign partners," he said.

The DOJ announced KleptoCapture in March, saying the team would focus on economic sanctions against oligarchs in response to Russia's invasion. The entity said crypto tracing would be one key focus for the group at the time.

UPDATE (Oct. 20, 2022, 03:20 UTC): Adds additional information.

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Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.

CoinDesk - Unknown

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.