UK Sanctions Kyrgyz Bank, $9.3B Crypto Network Tied to Russia

The United Kingdom imposed sanctions on Kyrgyzstan’s financial sector and crypto networks it said were used by Russia to bypass Western restrictions, targeting an alleged $9.3 billion, ruble-backed stablecoin operation.

The new measures build on more than 2,700 existing UK sanctions against Russia and follow a similar move last week by the United States, the UK government said in a Wednesday announcement.

Among those sanctioned was Capital Bank of Central Asia and its director, Kantemir Chalbayev, which the UK claims Russia used to finance military goods. Two Kyrgyz crypto exchanges, Grinex and Meer, were also blacklisted, along with entities tied to the infrastructure supporting the A7A5 stablecoin.

According to the UK government, A7A5 processed $9.3 billion worth of transactions in just four months. Designed to mimic the ruble onchain, the token was described as a direct attempt to undermine Western sanctions.

Related: Global Ledger detects $15M of Garantex assets flowing despite Tether’s freeze

UK targets more crypto players

The list of sanctioned entities also included Luxembourg-based Altair Holding, CJSC Tengricoin, Old Vector, A7A5 director Leonid Shumakov and several individuals linked to the network.

“If the Kremlin thinks they can hide their desperate attempts to soften the blow of our sanctions by laundering transactions through dodgy crypto networks — they are sorely mistaken,” UK Sanctions Minister Stephen Doughty said.

As reported, Grinex had been widely viewed as a successor to the sanctioned Garantex platform. The exchange allegedly credited balances by users of Garantex, which was hit with a $27 million USDT freeze by Tether in March.

Last week, the US Treasury’s Office of Foreign Assets Control (OFAC) redesignated Garantex. It also sanctioned Grinex, along with three executives and six Russia- and Kyrgyz Republic-based firms, accusing them of facilitating illicit transactions.

Related: EU sanctions crypto entities for election interference, disinformation

Kyrgyz president rejects UK sanctions claims

On Thursday, Kyrgyz President Sadyr Japarov pushed back against London’s decision, warning against politicising the economy, according to a report by Reuters. He denied that any of the country’s 21 banks were helping Russia skirt sanctions.

“To prevent any of them from falling under sanctions, we have decided that only the state-owned Keremet Bank will work with the Russian ruble,” Japarov said. Keremet Bank was sanctioned by Washington earlier this year for serving as a hub for Russian trade payments.