The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) recently sanctioned a developer at OKO Design Bureau, a Russia-based drone maker, on May 1. The sanctions were imposed to limit Russia’s access to the global financial system and disrupt its influence in the war against Ukraine. The developer was added to the Specially Designated Nationals (SDN) list, and three crypto addresses associated with the firm were also targeted. The move was part of efforts to combat Russia’s use of cryptocurrency to evade sanctions imposed by the US and others in the conflict.
Blockchain investigator Chainalysis revealed that OKO Design Bureau operated a Telegram channel to solicit crypto donations, providing detailed descriptions and videos of its operations, including testing with the Russian Ministry of Defense and deploying unmanned aerial vehicles (UAVs) against Ukraine. Despite these efforts, the drone maker’s crypto donation collection was minimal, indicating limited success in fundraising through cryptocurrency. The case of the sanctioned Russian drone maker is not isolated, as several Russian militia groups were found to have used crypto addresses and donations to fund and drive their war efforts.
Secretary of the Treasury Janet L. Yellen emphasized that OFAC sanctions on crypto addresses would disrupt Russia’s war strategies by targeting its military-industrial base and the evasion networks that support it. The aim is to further degrade Russia’s ability to finance and sustain its military operations by cracking down on entities like OKO Design Bureau and its financial networks that facilitate these activities. The US financial watchdog seeks to combat crypto-related and non-crypto-related crimes from Russia through such sanctions.
In recent years, individuals and entities seeking to evade sanctions have turned to cryptocurrency due to its anonymity. The OFAC has taken action against entities involved in fundraising for groups like Hamas and Hezbollah, which have engaged in violence and terrorism. In the case of Hamas, a Gaza-based news outlet called Gaza Now was found to have solicited donations for the organization and accepted funds in cryptocurrency. The OFAC and UK’s Office of Foreign Sanctions Implementation identified several cryptocurrency addresses associated with Gaza Now, which had received significant donations in crypto.
Chainalysis reported that between February 2021 and February 2023, Russian militia groups received nearly $5.4 million in cryptocurrency donations. The OFAC sanctions list, active since 2018, continues to investigate and prohibit individuals, developers, and companies linked to suspicious programs and activities involving crypto and non-crypto-related crimes. These efforts are part of a broader strategy to disrupt the financing and support networks enabling illicit activities, including war efforts and terrorism that pose a threat to global security and stability. By targeting crypto addresses and networks used for illicit purposes, authorities seek to cut off funding and resources that fuel such activities and contribute to conflict and instability in various regions.
