Foreign states facing U.S. sanction including Russia, China, Iran and North Korea are using digital assets to evade the impacts of those sanctions. The economic sanctions in place can prevent a foreign government access to the U.S. financial system or freeze an entity’s assets under U.S. jurisdiction.
However sanctioned entities are using digital assets, like Bitcoin and other cryptocurrencies, to hide their transactions. These allow countries to generate funds from cybercrime and other illegal or illicit activities the U.S. looks to stem through sanctions.
Federal agencies that monitor illegal financial activities—such as the Departments of Justice and Treasury—have taken action to address the risks posed by digital assets. For example, in October 2022, the DOJ charged five Russian and two Venezuelan nationals for using cryptocurrency to evade sanctions related to obtaining Venezuelan oil and U.S. military technology.
The digital asset industry has also faced penalties for its role in these transactions. For example, in November 2023, the Treasury announced a financial settlement of nearly $4.4 billion with Binance Holdings Ltd. (a cryptocurrency exchange) and its affiliates for violations of U.S. anti-money laundering and sanctions laws. .
The March 2023 report of the U.N. Panel of Experts overseeing sanctions on North Korea found rising revenues from theft of cryptocurrencies and an increase in illicit maritime activity by North Korea. The U.N. report highlights investigations into reports of North Korea selling ammunition and military equipment to Russia and other member states. The report flags concerns about North Korea’s illicit activities and their potential impact on global security, and the country’s ability to bypass international sanctions and continue to finance its nuclear program.
An international consortium of journalists analyzed close to 300 Estonian-registered crypto companies and discovered dozens of crimes: massive-scale fraud, money laundering, sanctions evasion, and illicit financing of Russian paramilitary organizations such as Wagner Group.
Jeffrey Newman is a whistleblower lawyer and his firm represents whistleblowers in healthcare fraud under the False Claims Act (FCA) also whistleblowers under the SEC whistleblower program and CFTC whistleblower program. He can be reached at Jeff@JeffNewmanLaw.com or at 617-823-3217
