EU Sanctions First Crypto Exchange to Crack Down on Sanctions Evasion

The European Union has intensified its efforts to combat sanctions evasion, particularly through cryptocurrency platforms, by imposing its 16th sanctions package against Russia. The measures, announced on February 24, 2025, mark three years since Russia’s invasion of Ukraine and include expanded restrictions on digital asset transactions and services. The package targets entities facilitating circumvention of financial controls, with a focus on crypto exchanges and networks involved in illicit financial flows. Among the 83 new sanctions listings, Russian cryptocurrency exchange Garantex was added to the EU’s sanctions list for being “closely associated with EU-sanctioned Russian banks,” marking the first time the EU has sanctioned a crypto exchange. Garantex, previously sanctioned by the U.S. in April 2022, has been linked to Russian state interests and criminal networks, including ties to Rosneft and associations with terror groups. The EU emphasized its readiness to escalate pressure on Russia, stating that the package targets actors circumventing sanctions through third countries ICIJ - EU Sanctions Russian Crypto Exchange Garantex^[1].

The sanctions extend to Belarus, imposing similar trade and financial controls, and include measures against Russia’s “shadow fleet” of 74 vessels circumventing oil price caps. Financial restrictions were tightened on non-Russian banks using Russia’s SPFS messaging system, aiming to limit alternative payment networks. The package also expanded oversight of crypto-asset wallets and services, reflecting growing concerns about the role of digital assets in enabling illicit financial activity. Garantex, which became Russia’s largest crypto exchange, allowed users to convert rubles into cryptocurrencies to bypass capital controls, leveraging blockchain’s pseudonymous nature to obscure transaction identities. Despite claims of cooperating with authorities, Garantex’s corporate structure revealed connections to sanctioned entities, including a convicted gang leader and a terror group linked to Hamas ICIJ - EU Sanctions Russian Crypto Exchange Garantex^[1].

The EU’s actions also targeted a broader network of individuals and entities facilitating disinformation campaigns and election manipulation. Simeon Boikov, a pro-Kremlin influencer known as “AussieCossack,” was sanctioned for disseminating fabricated content, including allegations of voter fraud in the 2024 U.S. election in Georgia. Boikov’s fundraising through crypto platforms and cash-to-crypto services highlighted the challenges of tracking illicit flows. A7 OOO, a company linked to Moldovan oligarch Ilan Shor, was sanctioned for its role in manipulating Moldova’s 2024 elections and EU accession referendum, with reports indicating it moved $1 billion from Moldovan banks. The entity’s use of a ruble-backed stablecoin on Grinex, a successor to Garantex, underscored the interconnectedness of sanctioned crypto networks in enabling dual-use goods trade and financial evasion DISA.org - European Union Imposes Sanctions on Cryptocurrency Network Linked to Russia^[3].

Analysts note that the EU’s approach reflects a strategic shift toward disrupting the entire lifecycle of influence operations, addressing not only content dissemination but also the financial infrastructure underpinning it. However, enforcement challenges persist, particularly in decentralized finance and privacy-centric cryptocurrencies. While blockchain analytics tools like Elliptic and Chainalysis aid in tracing transactions, peer-to-peer platforms and privacy coins remain harder to monitor. Experts warn that Russia may adapt by accelerating initiatives like its digital ruble or leveraging state-backed systems to bypass conventional financial networks. The EU’s measures could influence global regulatory standards, encouraging harmonization of AML and sanctions protocols across jurisdictions Cryptonews - EU Adopts New Sanctions, Crypto Restrictions Against Russia^[2].

The expanded crypto restrictions and financial controls aim to weaken Russia’s economic resilience and limit access to alternative funding channels. By targeting both traditional trade and digital asset transactions, the EU seeks to close loopholes exploited by sanctioned entities. However, the effectiveness of these measures hinges on international cooperation and the ability to address the borderless, pseudonymous nature of crypto transactions. As the EU continues to adapt its sanctions regime, the focus on crypto platforms and their role in geopolitical conflicts signals a broader recognition of digital assets as both a tool for financial resilience and a target for regulatory scrutiny Catenaa - EU Tightens Sanctions on Russia, Expands Crypto Rules^[4].