Chainalysis Examines Bitcoin Addresses Included in OFAC’s Designation that Were Reportedly Used to Facilitate Illicit Activities

On November 3, 2023, the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Russian national Ekaterina Zhdanova for using cryptocurrency “to launder money on behalf of Russian elites, ransomware groups, and other bad actors.”

Chainalysis has examined the three Bitcoin addresses “included in OFAC’s designation that she used to facilitate these illicit activities.”

As noted in the update from Chainalysis, Zhdanova had “employed her knowledge of cryptocurrency and connections with illicit actors around the world to launder money for Russian elites.”

According to OFAC, in March 2022, Zhdanova helped “a Russian client launder more than $2.3 million, moving the money to Western Europe via fraudulent investment accounts and real estate purchases.”

In another instance, a Russian oligarch contacted Zhdanova “to move approximately $100 million to the United Arab Emirates (UAE). She helped similar clients obtain tax residency in the UAE, as well as identification cards and bank accounts based in Dubai. Zhdanova used similar tactics to move ill-gotten funds for the Russia-based ransomware group, Ryuk.”

Zhdanova successfully executed these activities by transferring funds “through crypto platforms without Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) controls.”

One such platform is Garantex, “an OFAC-designated Russian crypto exchange we previously wrote about for its role in money laundering and which accounted for the majority of sanctions-related transaction volume between 2022 and 2023.”

Zhdanova also leveraged her connections “with other money launderers to expand her global reach, and gained access to more traditional high-end businesses, such as a luxury watch company, which opened doors to financial systems in other countries.”

A search of her email address also reveals “a small hotel she is selling in Russia, as well as pages related to other similar business ventures.”

While it’s unclear whether these initiatives are “related to her money laundering activity, they show the breadth of her business operations overall.”

Zhdanova directly assisted Russian oligarchs “in circumventing recent sanctions enacted by the U.S. in response to Russia’s invasion of Ukraine.”

By working with Zhdanova, these individuals were “able to access international markets — despite the sanctions — and provided an origin of funds that would not come into question with international authorities. Due to these activities, Zhdanova was designated under Executive Order 14024, for laundering on behalf of oligarchs and ransomware groups.”

OFAC identified three Bitcoin addresses as associated with Zhdanova.

As mentioned by OFAC, Zhdanova also laundered money “on behalf of ransomware groups. In the graph below, you can see how ransomware funds were transferred to Zhdanova’s wallet via a counterparty.”

Zdanova then transferred millions of dollars “to deposit addresses at mainstream exchanges, as well as to the aforementioned Garantex.”

This shows the breadth of her utilization of cryptocurrency “throughout the ecosystem, leveraging mainstream exchanges and those with AML/CTF deficiencies to launder funds on behalf of Russian oligarchs.”

As Chainalysis recently identified, ransomware is “on the rise in 2023, with the majority of active ransomware groups linked to Russia.”

Additionally, many high-risk exchanges operating in Russia continue “to launder money and work with ransomware groups to orchestrate other crimes.”

These malicious activities highlight “the need for law enforcement across the globe to utilize blockchain analysis to target and disrupt these organizations.”

OFAC’s actions  demonstrate their commitment “to safeguarding the United States financial system by monitoring and sanctioning illicit actors using cryptocurrency.”

As a result of Zhdanova’s designation, exposure “to any of the three Bitcoin addresses poses sanctions risk.”

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