Britain Cracks Down on Secret Crypto Lifeline Funding Russia’s War Machine

The United Kingdom has broadened its sanctions against financial networks it alleges are being exploited by Russia to evade Western sanctions, with a specific focus on cryptocurrency infrastructure. In a coordinated effort to counter Russia's attempts to circumvent economic restrictions, the UK has targeted a range of entities and individuals operating in Kyrgyzstan and Luxembourg, including several cryptocurrency exchanges and a rouble-backed stablecoin. This action follows a series of international efforts, with the U.S. also sanctioning key players in the same network in recent weeks.

The UK’s sanctions specifically target the Kyrgyzstan-based Capital Bank and its director, Kantemir Chalbayev, for their role in facilitating payments for Russian military goods. Alongside the bank, the Grinex and Meer cryptocurrency exchanges have also been sanctioned. These platforms have been identified as central to the infrastructure supporting A7A5, a rouble-backed stablecoin that has moved approximately $9.3 billion through a dedicated crypto exchange in just four months. This token has been designed to function as a tool to bypass international sanctions, with its creation and operation directly tied to sanctioned entities and individuals.

According to the UK's Sanctions Minister Stephen Doughty, these measures are a direct response to Russia's efforts to launder transactions through “dodgy crypto networks,” which he described as a desperate attempt to soften the impact of sanctions. The action is part of a broader strategy to ensure that Russia's war machine remains financially constrained. The UK has emphasized that it will continue to work with its allies, including the U.S., to strengthen sanctions and support efforts aimed at achieving a “just and lasting peace” in Ukraine.

Crypto forensics firms, including TRM Labs and Elliptic, have provided critical insights into the structure and operation of the A7A5 token. The stablecoin is issued by the Kyrgyzstani firm Old Vector and has been used to facilitate the recovery of assets from Garantex, a previously sanctioned Russian cryptocurrency exchange. Garantex's leadership has been linked to the development and deployment of Grinex and A7A5, which have enabled the continuation of illicit financial activity. Elliptic reported that over $1 billion was transferred daily through A7A5 in late June 2025, underscoring the scale of the evasion network.

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has also taken action against entities and individuals connected to A7A5. In its latest update to the Specially Designed National list, OFAC included A7 LLC and its subsidiaries, which are tied to the Moldovan businessman Ilan Shor and the Russian state-owned bank Promsvyazbank. These entities were identified as posing a secondary sanctions risk under the Ukraine/Russia-related sanctions regime. Additionally, Old Vector LLC, the Kyrgyzstani-based issuer of A7A5, was also sanctioned by the U.S.

The emergence of Grinex and A7A5 is closely linked to the geopolitical dynamics between Russia and Kyrgyzstan. Since Russia’s invasion of Ukraine, bilateral trade has expanded significantly, facilitated by the transfer of dual-use goods and parallel imports. Kyrgyzstan’s regulatory environment, marked by the January 2022 “On Virtual Assets” law, has created a legal framework that has attracted entities engaged in sanctions evasion. The country now hosts a substantial number of licensed virtual asset service providers, many of which have been linked to high-risk activities.

Analysts highlight the importance of this development in the context of global crypto regulation. As countries like the U.S. and the UK continue to refine their regulatory frameworks, the proliferation of stablecoins and their role in sanctions evasion remain significant concerns. The UK has been urged to develop a national stablecoin strategy to remain competitive with the U.S. and avoid being left behind in the evolving digital asset landscape. The industry argues that a proactive approach is necessary to position stablecoins not as a risk, but as a tool for enhancing financial infrastructure.

The continued expansion of sanctions against Russian-linked crypto networks reflects the intensifying efforts to isolate Russia economically. As the conflict in Ukraine persists, the UK and its allies remain committed to leveraging financial tools to counter evasion tactics and uphold the integrity of international sanctions regimes.

Source:

[1] UK targets sanctions circumvention and crypto networks ... (https://www.gov.uk/government/news/uk-targets-sanctions-circumvention-and-crypto-networks-exploited-by-russia)

[2] UK targets Russian crypto networks and Kyrgyz firms in ... (https://www.reuters.com/business/finance/uk-targets-russian-crypto-networks-kyrgyz-firms-new-sanctions-2025-08-20/)

[3] UK sanctions crypto exchange tied to Russian ruble stablecoin (https://finance.yahoo.com/news/uk-sanctions-crypto-exchange-tied-205416234.html)

[4] Garantex, Grinex, and the A7A5 Token: A Deep Dive into ... (https://www.trmlabs.com/resources/blog/garantex-grinex-and-the-a7a5-token-a-deep-dive-into-sanctions-evasion-networks)

[5] US sanctions Russian Ruble stablecoin issuer A7A5 (https://www.mitrade.com/insights/news/live-news/article-3-1040897-20250815)