Russia's "shadow" encryption payment transaction volume reaches 9 billion USD, challenging Western financial sanctions.

Gate news, amidst the backdrop of severe financial sanctions imposed by the West on Russia, a "shadow" Crypto Assets Payment Network aimed at circumventing these restrictions is emerging. The Financial Times recently disclosed that a Crypto Assets Token named A7A5 has reached a trading volume of approximately $9.3 billion in just four months, involving fugitive Oligarchs, sanctioned Russian banks, and a complex chain of fund transfers. This discovery not only reveals Russia's strategy of using Crypto Assets to evade sanctions but also highlights new challenges facing global financial regulation.

1. A7A5: The Rise of Ruble-Linked Stablecoins and the "Shadow" Trading Network

The A7A5 Token is known as the first stablecoin pegged to the Russian ruble, officially launched in Kyrgyzstan this February. Its core objective is to facilitate large-scale inflows and outflows of funds into Russia to bypass the financial restrictions imposed by the West. According to an analysis by British media of wallets associated with the Kyrgyzstan crypto assets exchange Grinex, a total of $9.3 billion worth of A7A5 has been transferred between wallets linked to the exchange. Grinex is a newly established exchange that only supports trading in A7A5, ruble, and dollar-pegged stablecoins.

The support funds for A7A5 come from ruble deposits at Promsvyazbank, a bank that has been sanctioned by the US, UK, and EU due to Russia's full-scale invasion of Ukraine. Although the circulating supply of A7A5 tokens is 12 billion (approximately $156 million), its daily transaction volume is usually several times that amount, indicating that it is intensively used by a relatively small user base, with a very high transaction frequency.

II. Behind the Scenes: The Fugitive Oligarchs and Political Influence Activities

The latest report from the London-based non-profit research organization, the Center for Information Resilience (CIR), indicates that the A7A5 Token appears to be linked to Moscow's attempts to use Crypto Assets to fund overseas political influence activities. Records show that A7, the company that originally issued the Token, is currently under UK sanctions, with a majority stake held by Moldovan businessman Ilan Șor. Șor was convicted for the country's largest bank fraud case in history, later fleeing to Moscow and acquiring Russian nationality. CIR found that several domain names used for political influence activities in Moldova share an IP address with A7 and A7A5 websites, suggesting a connection to political activities.

A7A5 supervisor Leonid Shumakov stated that the choice of Kyrgyzstan is because the country is "a friendly jurisdiction and not easily subjected to sanctions," and is "actively helping (Russia) cope with the pressures it faces." Russian users can purchase A7A5 Tokens on the Tron or Ethereum blockchains, then use them to buy Tether's USDT, and withdraw the value in their desired country/region or currency, thus achieving free flow of cross-border funds.

3. The Collapse of Garantex and the Rise of the "Heir" Grinex

The birth and growth of A7A5 and Grinex seem closely related to the collapse of another major Russian shadow payment system - the crypto asset exchange Garantex. In March of this year, U.S. law enforcement shut down Russia's largest crypto asset exchange, Garantex. Tether cooperated with the investigation and froze $23 million worth of USDT in Garantex's wallet, an action described by Garantex as "declaring war on the Russian crypto asset market."

According to data from the Swiss blockchain research company Global Ledge, a large amount of USDT funds was transferred from the Garantex platform to the A7A5 platform in the weeks leading up to the crackdown in the U.S. Videos shared on social media from the Garantex office show that one of the counters has the A7A5 logo, suggesting a collaboration between the two exchanges. Subsequently, approximately $29 million worth of A7A5 Tokens was transferred to the newly established exchange Grinex in Kyrgyzstan.

Analysts believe that Grinex is likely the successor to Garantex, which was shut down by U.S. actions. CIR's investigation found that both Grinex and A7A5 were registered in Kyrgyzstan during the same week. Tom Robinson, Chief Scientist and Founder of blockchain analytics firm Elliptic, stated that Garantex users can transfer their outstanding balances to new Grinex accounts, suggesting that Grinex is a direct successor to Garantex and is likely operated and controlled by the same parties. Although Grinex denies any association with Garantex and claims to comply with international sanctions, its assertions of 'seizing market opportunities after Garantex's closure', along with the timing of transactions closely aligning with Moscow's office hours, raise questions about its independence.

IV. The Necessity and Future Challenges of Local Stablecoins

Tether's move to freeze Garantex assets highlights the necessity for Russia to create a domestic stablecoin. Osman Kabaloev, the Deputy Minister of Finance of Russia, stated that this has prompted them to consider creating a domestic stablecoin similar to USDT. Thomas from CIR also pointed out that if a stablecoin is controlled by Western entities, investors may face the risk of losing their funds, whereas if the assets are located in Russia or friendly countries, the investment is safer.

Sol recently stated at a forum that A7 is creating a larger, differentiated, and "sufficiently invulnerable" new payment system, which will involve trading in "depoliticized" instruments such as securities and precious metals to circumvent regulators, with cryptocurrencies being just one avenue. CIR found that A7 had posted job advertisements for Chinese speakers, energy experts, and accountants in the UAE, Kyrgyzstan, and the Russian-occupied areas of Ukraine, demonstrating its ambition to build a "shadow" financial network globally.

Conclusion:

The exposure of the A7A5 Token and Grinex exchange by the British media reveals Russia's efforts to build a "shadow" financial system using cryptocurrency under Western sanctions. This new evasion strategy not only allows for large-scale capital to flow across borders but also provides financial support for Russia's political influence activities. Despite facing ongoing attention and sanctions pressure from the international community, Russia's attempts to utilize "friendly jurisdictions" and localized encryption tools undoubtedly pose new challenges for global financial regulation. In the future, effectively identifying, tracking, and combating such "shadow" crypto payment networks will be an important issue for the international community to maintain financial order and the effectiveness of sanctions.