UK sanctions crypto exchanges and stablecoin issuer over Russia payment networks

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UK sanctions crypto exchanges

Highlights

UK sanctions 18 entities and individuals, including HTX exchange, Bitpapa, and Virtual Asset Issuer, for supporting Russia's illicit financial channels linked to the war in Ukraine.
For the first time, UK enforces Regulation 17A on crypto exchanges, requiring firms to freeze funds and trace blockchain transactions to sanctioned entities, expanding compliance obligations.
British authorities target the Kremlin-backed A7 payments network, which processed over $90 billion in 2023 to facilitate Russian oil sales and military procurement, signaling tougher scrutiny on crypto markets.

Sanctions package targets exchanges and payment channels

As reported by CoinDesk, the U.K. Foreign, Commonwealth & Development Office sanctions 18 entities and individuals tied to what officials describe as Russia’s illicit financial infrastructure used to move funds, procure goods and sustain its war in Ukraine.

Those named include Huobi Global S.A., operator of the HTX exchange, as well as Rapira Group LLC, Aifory LLC, Arvix LLC and Bitpapa IC FZC LLC. Britain also sanctions Open Joint Stock Company “Virtual Asset Issuer,” a Kyrgyzstan-linked company behind the USDKG gold-backed stablecoin, alongside several individuals accused of sanctions-evasion activity, including Sergey Mendeleev, Igor Gorin, Irina Akopyan and Israeli national Liran Cohen.

Elliptic says HTX is among the world’s largest crypto exchanges, with roughly $3.3 trillion in trading volume last year. The blockchain analytics firm also says the platform is suspected of providing services to both the A7 payments network and Garantex, a Russian crypto exchange previously sanctioned by Western authorities.

Garantex rebrands to Grinex earlier in the year and last month halts operations after a $13 million state-backed hack, according to the article. CoinDesk says it reaches out to Huobi for comment but does not hear back by press time.

Compliance burden rises for UK crypto sector

For the first time, the UK applies Regulation 17A of its Russia sanctions regime to crypto exchanges, extending a tool previously used against sanctioned banks to digital asset markets. Under the rules, U.K. financial firms and crypto service providers cannot maintain correspondent relationships with designated entities or process payments linked to them.

Companies may also need to freeze funds and trace blockchain transactions connected to sanctioned platforms. Elliptic says that requirement could force firms to follow transfers across multiple blockchain hops, widening compliance checks beyond direct counterparties to wallets and exchanges that appear anywhere in a transaction chain.

A central focus of the package is the Kremlin-backed A7 payments network, which British officials say helps process proceeds from Russian oil sales and support military procurement. The U.K. says the network moves more than $90 billion last year, and Elliptic says other regulators are likely to watch closely as Britain tests a new model for applying traditional financial sanctions rules to crypto markets.

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