Authorities in the U.S. and U.K. have dismantled a money-laundering network accused of aiding Russian elites in bypassing international sanctions using cryptocurrency, specifically the stablecoin Tether.
Key Figure: Ekaterina Zhdanova
At the center of the network is Ekaterina Zhdanova, a Russian businesswoman reportedly instrumental in Tether’s prominence within the financial underworld, according to the Wall Street Journal.
Zhdanova allegedly operated through her organization, Smart Group, which facilitated large-scale cash-to-crypto conversions for high-profile clients. The U.S. Treasury Department stated that Russian members of the network transferred Tether to digital wallets controlled by Zhdanova, enabling the obscuring of funds’ origins for activities such as purchasing property in the U.K.
Sanctions and Financial Crime Accusations
Zhdanova and five associates have been sanctioned, adding to her blacklisting from 2022. Investigators retrieved Telegram messages indicating Zhdanova arranged substantial ruble-to-Tether transactions, with wallets linked to her handling over $350 million.
Bradley Smith, Acting Undersecretary for Terrorism and Financial Intelligence at the U.S. Treasury, remarked:
“Russian elites sought to exploit digital assets—in particular, U.S. dollar-backed stablecoins—to evade sanctions, further enriching themselves and the Kremlin.”
Broader Allegations and Arrests
The U.K.’s National Crime Agency (NCA) accused Smart Group of funding Russian espionage and laundering money for criminal enterprises, including the Irish Kinahan cartel.
A London-based network under Zhdanova allegedly funneled approximately $19 million through cash deliveries, followed by rapid cryptocurrency transactions. The funds were reportedly used by gangs to purchase drugs and firearms without physically moving cash across borders.
The NCA and its U.S. counterparts have made 84 arrests connected to the network.
Tether’s Role and Regulatory Probes
Tether Holdings, based in the British Virgin Islands, was not directly implicated in the network but faces separate U.S. investigations into potential financial crime law violations.
Russia’s Evolving Crypto Regulation
In parallel with these developments, Russia is advancing its cryptocurrency framework. On November 29, President Vladimir Putin signed legislation legalizing crypto mining and recognizing digital currencies as property.
The new tax regulations for the sector, effective November 1, allow only registered Russian entities to mine cryptocurrency. This move aligns with Russia’s efforts to regulate its growing digital asset market, underscoring the role of crypto in geopolitical financial strategies.
Conclusion
The U.S. and U.K.’s crackdown highlights how cryptocurrency can be exploited for illicit activities while underscoring the urgent need for global regulatory collaboration. As digital assets like Tether gain traction, ensuring their use within legal frameworks becomes increasingly vital.
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