US Treasury Dept. Warns Not to Facilitate Crypto Sent to Russia

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Pursuant to Regulations from the Office of Foreign Assets Control of the US Treasury, US residents (companies and individuals) are prohibited from utilizing cryptocurrencies to the benefit of the Russian government (including the Russian Central Bank). This regulation, scheduled to go into effect on March 1, is intended to prevent attempts to circumvent the current US imposed sanctions against Russia for its invasion of Ukraine.

'The unprecedented action we are taking today will significantly limit Russia’s ability to use assets to finance its destabilizing activities, and target the funds Putin and his inner circle depend on to enable his invasion of Ukraine,' said Secretary of the Treasury Janet L. Yellen. 'Today, in coordination with partners and allies, we are following through on key commitments to restrict Russia’s access to these valuable resources.'

[U.S. DEPARTMENT OF THE TREASURY. Treasury Prohibits Transactions with Central Bank of Russia and Imposes Sanctions on Key Sources of Russia’s Wealth. (Accessed February 28, 2022).

This action taken by the Treasury was accomplished pursuant to Executive Order (EO) 14024. This Order authorizes the use of sanctions against Russia resulting from Russian harmful foreign activities such as its total disregard and respect for the sovereignty and territorial integrity of other states. Specifically:

Pursuant to the Russia-related Sovereign Transactions Directive, United States persons are prohibited from engaging in any transaction involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation.

[Id.].

This action by the Treasury bolstered US commitments made to its partners and allies on February 26, to impose restrictive measures having the effect of preventing the Russian Central Bank from using its international reserves to undermine the impact of the sanctions imposed. Also, the action is intended to further disrupt any attempt by Russia to prop up the rapidly depreciating Ruble by restricting the global supply of the currency and impede any attempt to access reserves it may try to exchange to support this currency.

The regulation further specifically blocked three entities which provided Russia a route to the US financial systems. These entities are: The Russian Direct Investment Fund (RDIF); Joint Stock Company Management Company of the Russian Direct Investment Fund (JSC RDIF); and, Limited Liability Company RVC Management Company (LLC RVC). Also specifically sanctioned was Russian elite, Kirill Aleksandrovich Dmitriev, a close Putin associate.

According to a report by Bloomberg, it is reported that the White House has requested cryptocurrency exchanges to prohibit Russian businesses and individuals from using any digital assets to circumvent the imposed sanctions. In response, Binance has outright refused to unilaterally freeze the accounts of millions of innocent users. Kraken has responded that they will undertake no action until legally required to do so.

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