Ukraine Sanctions 70 People 60 Companies Over Crypto Transactions

Ukraine has implemented a new sanctions package aimed at cutting off one of Russia's primary funding sources: billions of dollars in cryptocurrency transactions. This move is part of a broader strategy to isolate Russia economically, following the ongoing conflict. The sanctions target the use of cryptocurrencies, which have become a significant lifeline for Russia, allowing it to circumvent traditional financial systems and maintain economic stability despite international restrictions.

The new sanctions are designed to be comprehensive, targeting not only the direct use of cryptocurrencies but also the infrastructure that supports these transactions. This includes exchanges, wallets, and other services that facilitate the movement of digital assets. By severing these connections, Ukraine aims to make it more difficult for Russia to access funds that could be used to support its military operations or other strategic initiatives.

President Volodymyr Zelenskyy approved the sweeping measures, which blacklist over 70 people and 60 companies accused of facilitating sanctions evasion. The sanctioned entities include major Russian crypto miners, digital asset issuers, and payment intermediaries suspected of moving large volumes of capital to support Russia’s military and industrial sectors. A notable portion of these operations are believed to serve as conduits for transferring assets through decentralized platforms amid global financial restrictions.

Several foreign-based firms were also hit with penalties. Among them are Cyprus’s TokenTrust Holdings, Kazakhstan’s EXMO RBC, and UAE-based exchanges like AWX and Bitpapa—all previously sanctioned by the U.S. for similar activities. Ukrainian authorities accuse these companies of helping Russia convert cryptocurrencies into fiat currencies outside traditional financial systems.

According to the president’s office, one firm alone moved billions of dollars this year to benefit Russia’s defense sector. Officials say the reliance on crypto has grown as traditional banking routes become increasingly inaccessible to Russia. The latest sanctions freeze assets and prohibit business dealings within Ukraine. Zelenskyy described the crackdown as both a national move and a coordinated response with allies, vowing to shut down any remaining loopholes.

The sanctions come at a time when Russia is already facing significant economic challenges. The country's National Welfare Fund (NWF) has been replenished with a substantial injection of funds, totaling RUB1.3 trillion ($14.9 billion), in June. This injection was made possible by the transfer of foreign exchange proceeds and gold reserves purchased last year. Despite this, Russia continues to face pressure on oil revenues and a growing federal deficit. The NWF, which serves as a key backstop for the Russian budget, has seen its liquid portion increase from RUB2.84 trillion at the beginning of June to RUB4.13 trillion by the start of July. This increase was driven by the transfer of CNY61.1 billion and 74 tonnes of gold acquired in 2023 from additional oil and gas revenues.

The Ministry of Finance has noted that the NWF's liquid assets are expected to reach RUB7.3 trillion by the end of 2025, up from RUB5.25 trillion in 2024. This year alone, RUB447 billion from the NWF is earmarked for budgetary use. The federal budget deficit for 2025 is now projected at RUB3.79 trillion, more than triple the originally planned RUB1.17 trillion. The Ministry of Economic Development has also confirmed that up to RUB1 trillion in NWF assets could be invested this year, including RUB300 billion for the Moscow–St. Petersburg high-speed rail line.

Despite the replenishment of the NWF, oil and gas revenues remain under pressure. In June, oil and gas revenues totaled RUB494.8 billion, bringing the half-year figure to RUB4.73 trillion—still RUB2.62 trillion short of the earlier annual forecast of RUB10.94 trillion. For July, the ministry expects an NGD shortfall of RUB25.8 billion. To stabilize the budget, the Finance Ministry will sell foreign currency worth RUB18.8 billion between July 7 and August 6. Including the Bank of Russia’s “mirroring” operations, daily forex sales will reach RUB9.7 trillion.

The Russian banking sector, once buoyed by record profits and wartime stimulus, is now showing growing signs of financial strain. This strain is exacerbated by the ongoing conflict and the economic sanctions imposed by various countries. The situation with the NWF is now much more tense than it was before, given that current oil prices remain below the fiscal rule’s cutoff level of $60 per barrel. The transfer of prior-year reserves would “eliminate the risks of depleting the liquid part of the NWF in the near future,” according to analysts. The government will consider adjusting the budget rule’s cutoff price, which could provide some relief to the strained financial situation.

The sanctions on cryptocurrency transactions are a significant step in Ukraine's efforts to isolate Russia economically. By targeting this lifeline, Ukraine aims to further weaken Russia's ability to fund its military operations and maintain economic stability. The effectiveness of these sanctions will depend on how well they are enforced and the extent to which Russia can find alternative funding sources. However, the move underscores the growing importance of cryptocurrencies in global finance and the need for international cooperation to address their use in illicit activities.