OFAC Cracks Down: Kyrgyzstan Firms & Stablecoins Caught in Russian Sanctions Crossfire

US Treasury’s financial enforcers just dropped the hammer—Kyrgyzstan-based companies and dollar-pegged crypto assets are the latest targets in the escalating sanctions war against Russia.

Stablecoins in the Spotlight

OFAC’s move exposes how digital assets—once hailed as apolitical tools—are now geopolitical chess pieces. The irony? Tether and friends were supposed to 'bank the unbanked,' not help oligarchs dodge SWIFT bans.

Central Asia’s Shadow Corridors

The Kyrgyz connection reveals Moscow’s playbook: use regional financial hubs with lax oversight to reroute capital flows. Crypto’s borderless nature makes it the perfect vehicle—until blockchain analytics catches up.

Crypto’s Compliance Reckoning

Another wake-up call for exchanges and stablecoin issuers. Regulatory scrutiny isn’t fading—it’s laser-focused on every transaction that smells like sanctions evasion. (But hey, at least compliance officers get to keep their jobs.)

The takeaway? When superpowers clash, crypto’s neutrality myth gets shattered faster than a shitcoin’s market cap.

High volume ruble-backed transfers

A7 LLC, the creator of the ruble-backed A7A5 stablecoin, was singled out for its reported role in transferring about $1 billion daily, according to blockchain analytics firm Elliptic.

A7 and its subsidiaries, A71 and A7 Agent, are majority-owned by Ilan Shor, who was convicted in 2017 for his role in the theft of $1 billion from three Moldovan banks, and Russian state-owned Promsvyazbank (PSB), which is a sanctioned entity due to its role in financing Russia’s defense sector.

Both Shor and PSB have been accused of undermining democratic processes abroad, including alleged vote-buying in Moldova’s 2024 elections.

Old Vector LLC, based in Kyrgyzstan, serves as the issuer of the A7A5 token. While Kyrgyzstan maintains a permissive regulatory framework for crypto issuers, U.S. officials allege the company’s activities were integral to Russia’s sanctions evasion network.

Platforms linked to sanctioned entities

The Treasury also targeted entities tied to Sergey Mendeleev, co-founder of the sanctioned Garantex crypto exchange, which was used to move illicit funds, including via Tether’s stablecoin USDT.

Garantex was dismantled with assistance from the U.S. Secret Service, which froze $26 million in USDT with Tether’s help.

Mendeleev is also behind the “Cryptorouble” (RUBT) stablecoin and Exved, a cross-border payments platform designed for Russian exporters and importers operating under sanctions pressure.

Exved reportedly uses USDT to obscure Russian business ties in transactions worth tens of billions of rubles each month. Technical services to Exved are provided by Indefi Smartbank, backed by Russian oligarch Alexander Lebedev.

Kyrgyzstan-based Grinex, described by Elliptic as Garantex’s successor, was also sanctioned for facilitating trades in A7A5 and USDT.

The action reflects OFAC’s increasing scrutiny of cryptocurrency in sanctions enforcement. In recent years, the agency has expanded its Specially Designated Nationals (SDN) list to include a growing number of digital asset addresses, enabling exchanges, payment processors, and financial institutions to block transactions linked to sanctioned actors.

Elliptic said it has updated its blockchain monitoring tools so clients can detect and block any transactions tied to the sanctioned wallets and entities. Regulators have signaled they will continue targeting stablecoin-based systems that bypass the traditional financial sector, viewing them as a growing threat to sanctions compliance.