As international sanctions tighten around Russia, a new network of cryptocurrency exchanges is emerging, allowing the country to sidestep financial restrictions, according to a recent report from crypto analytics firm Elliptic.
Elliptic identified five exchanges—Bitpapa, ABCeX, Exmo, Rapira, and Aifory Pro—that are facilitating Russian ruble-to-crypto conversions. These transactions can then be transferred across borders without passing through traditional financial intermediaries, and eventually converted into other fiat currencies, effectively bypassing sanctions.
Garantex’s Downfall and the Rise of New Exchanges
This network has sprung up following the takedown of Russian exchange Garantex in March 2022. Garantex was heavily sanctioned for facilitating illicit crypto transactions and helping Russia evade sanctions imposed after its invasion of Ukraine.
Among the new players, Bitpapa stands out as the only exchange that has already been sanctioned by the U.S. Treasury’s Office of Foreign Assets Control (OFAC) for its role in sanctions evasion. According to Elliptic, approximately 9.7% of Bitpapa’s outgoing crypto funds are destined for OFAC-sanctioned targets, and the exchange is known to manage its wallets to evade sanctions enforcement by frequently rotating addresses.
Exmo’s Persistent Role in Russia
Another significant finding is the continued operation of Exmo in Russia, despite the exchange’s claim to have exited the country after the invasion of Ukraine. Elliptic revealed that Exmo.com and Exmo.me continue to share the same custodial wallet infrastructure, allowing funds from the Russian-facing platform to be mixed with those from the Western-facing entity. This arrangement has facilitated over $19.5 million in direct transactions with sanctioned entities.
Other Notable Exchanges
ABCeX, operating from Moscow’s Federation Tower, has processed at least $11 billion in crypto transactions, with significant amounts sent to Garantex and Aifory Pro. Rapira, based in Georgia with an office in Moscow, has engaged in over $72 million in direct transactions with the sanctioned exchange Grinex, which succeeded Garantex.
Aifory Pro, serving Moscow, Dubai, and Türkiye, explicitly facilitates the bypass of service restrictions by offering virtual payment cards using USDt (USDT) to pay for foreign services blocked in Russia.
Regulatory Pressure and Future Implications
Despite growing regulatory pressure, many of these exchanges, some with nominal registrations outside Russia, continue to facilitate high volumes of cryptoasset trading linked to sanctioned entities. This trend underscores the challenges faced by international regulators in curbing the use of cryptocurrencies for illicit activities and sanctions evasion.
The European Union is set to pass a new sanctions package on Monday that would ban all crypto transactions with Russia, a broad measure aimed at closing off the technology to the country. Meanwhile, Russia’s finance ministry and central bank have called for the government to expedite the rollout of crypto regulations as the adoption of digital assets by Russians continues to rise.
As the global crypto landscape evolves, the battle between regulatory bodies and crypto exchanges will likely intensify, with significant implications for the future of financial regulation and the role of cryptocurrencies in the global economy.
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