US Treasury Dept lists crypto mining firm in latest sanctions against Russia

The United States Treasury Department has added Russia-based crypto mining services provider BitRiver and several subsidiaries as firms facilitating the evasion of sanctions. 

In a Wednesday announcement, the Treasury Department’s Office of Foreign Assets Control, or OFAC, said it was taking action against BitRiver AG as well as 10 of its Russia-based subsidiaries, naming the companies as ‘Specially Designated Nationals’. Firms and individuals listed as such by OFAC have their assets blocked and “U.S. persons are generally prohibited from dealing with them.”

According to the U.S. Treasury, the actions against BitRiver and its subsidiaries were based on them allegedly facilitating “sanctions evasion for Russian entities,” hinting crypto may have played a role in helping Russia’s government circumvent U.S. economic measures leveled in response to the invasion of Ukraine. The government department said BitRiver operated server farms selling crypto mining capacity internationally, which helped Russia “monetize its natural resources.”

“Russia has a comparative advantage in crypto mining due to energy resources and a cold climate,” said Treasury. “However, mining companies rely on imported computer equipment and fiat payments, which makes them vulnerable to sanctions. The United States is committed to ensuring that no asset, no matter how complex, becomes a mechanism for the Putin regime to offset the impact of sanctions.”

https://twitter.com/USTreasury/status/1516843188438372360?ref_src=twsrc%5Etfw

The latest sanctions followed OFAC warning U.S. residents not to use digital assets to benefit certain Russia-based entities and individuals. In April, the government department announced it had targeted Russia-based darknet marketplace Hydra and virtual currency exchange Garantex for alleged connections to payments from ransomware attacks and other cybercrimes.

“Treasury can and will target those who evade, attempt to evade, or aid the evasion of U.S. sanctions against Russia, as they are helping support Putin’s brutal war of choice,” said Brian Nelson, Under Secretary at the office of terrorism and financial intelligence.

Related: Treasury official acknowledges most crypto transactions are ‘legitimate’ but still anticipates additional sanctions

Prior to the invasion of Ukraine, Russia’s central bank proposed banning crypto mining, but President Vladmir Putin said at the time the industry had an advantage in the country due to the “surplus of electricity and the well-trained personnel.” Alexey Yakovlev, director of the financial policy department at Russia’s Ministry of Finance, has since suggested the government support industrial-level cryptocurrency mining in the country and it “probably does not make sense to ban household mining.”