Treasury sanctions another crypto exchange and two ransomware operators

Treasury sanctions another crypto exchange and two ransomware operators

Today, the Department of Treasury, alongside the Department of Justice, announced new sanctions on a cryptocurrency exchange linked to ransomware payouts.

The Treasury's Office of Foreign Asset Control (OFAC) has added Chatex, alongside affiliated entities IZIBITS OU, Chatextech SIA and Hightrade Finance Ltd to its sanctions list. Chatex is a crypto exchange that the Treasury found to have facilitated ransomware payouts:

"Chatex, which claims to have a presence in multiple countries, has facilitated transactions for multiple ransomware variants. Analysis of Chatex’s known transactions indicate that over half are directly traced to illicit or high-risk activities such as darknet markets, high-risk exchanges, and ransomware. "

Chatex was known for its links to Suex, another Russia-based OTC desk that OFAC sanctioned at the end of September, the first time it had taken action against a crypto exchange directly. Egor Petukhovsky is the founder of both exchanges, but he announced his departure from Chatex on the heels of the Suex designation.

In addition to the firms, the Treasury has also targeted two individuals associated with ransomware-based organized crime groups, Yaroslav Vasinskyi and Yevgeniy Polyanin.

A representative for blockchain analytics firm Chainalysis told The Block, "Chatex has received at least $77.5M in Bitcoin since it began operating in September 2018, including more than $17M in illicit funds, including from darknet markets (primarily Hydra), scams (primarily TheFiniko and QubitTech.ai), and various ransomware strains."

The Department of State also announced a $10 million reward for information leading to leaders of the Sodinokibi/REvil ransomware-as-a-service gangs.

In a note that seems to reach out to the crypto industry, the Treasury's announcement explains:

"While most virtual currency activity is licit, virtual currency remains the primary mechanism for ransomware payments, and certain unscrupulous virtual currency exchanges are an important piece of the ransomware ecosystem. The United States urges the international community to effectively implement international standards on anti-money laundering/countering the financing of terrorism (AML/CFT) in the virtual currency area, particularly regarding virtual currency exchanges."

Since the Suex designation, the Treasury has been busy engaging with the crypto industry, putting out new user-friendly guidance on basic expectations to avoid sanctions violations.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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