OFAC sanctions employee of Russian state-owned gold producer for laundering money via crypto

The US Treasury has sanctioned a Russian citizen working at Polyus, Russia’s largest state-owned gold producer, for his involvement in a complex cryptocurrency laundering scheme.

On January 12, the US Treasury Department announced a new package of sanctions against 300 individuals and organizations aimed at “restricting the ability” of the Russian military-industrial base to “exploit certain US software and information technologies” as the country “completes its transition process.” “To a complete war economy.”

As noted by blockchain intelligence firm TRM Labs, the Office of Foreign Assets Control (OFAC) also targeted Russian national Andrey Sudakov, who, along with his Hong Kong-based partner Mu, appeared to be an employee of U.S.-designated Russian state-owned gold producer Polyus. Xiaolu was charged with implementing “a complex, multi-layered laundering scheme in which payments from the sale of Russian-origin gold were converted into fiat currency and cryptocurrencies through multiple shell companies based in the UAE and Hong Kong.”

VPower’s blockchain-based service announcement | Source: TRM Laboratories

In the Treasury’s press release, it was stated that Hong Kong-based VPower Finance Security Hong Kong Limited was involved in the transportation of Russian-origin gold. TRM Labs noted that VPower also offers blockchain-based logistics services, allowing customers to “customize the collection and delivery of valuables through a mobile app.” It remains unclear whether VPower’s crypto-related services are included in the plan OFAC is referring to.

TRM Labs emphasized that the laundering schemes seen in this case are consistent with patterns the firm has observed, such as the use of Chinese electronics manufacturers “for Russia’s war effort, including Chinese companies sending parts to Russia, the involvement of Chinese intermediaries, coordination between Russians and Chinese.” logistics companies and Russian cryptocurrency traders who facilitate payments to companies in China.

“The United States and its allies aim to reduce Russia’s ability to continue its aggression against Ukraine by increasing the risk of sanctions against foreign financial institutions and restricting access to critical technologies.”

TRM Laboratories

The move is a continuation of a series of sanctions aimed at limiting Russia’s military capabilities. In early May, OFAC sanctioned Russian unmanned aerial vehicles (UAV) developer OKO Design Bureau for reportedly operating a Telegram channel soliciting donations in cryptocurrency, according to blockchain forensics firm Chainalysis.