Russia buys dual-use goods for cryptocurrency, uses them for weapons production - WSJ

Russians are actively using financial transactions with cryptocurrencies to circumvent Western sanctions and buy dual-use goods that are imported to Russia and used to produce weapons that the enemy is using to attack Ukraine. This was written by The Wall Street Journal, reported by UNN.

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In particular, the publication describes a situation where the Kalashnikov concern used the Tether cryptocurrency to transfer several million dollars for drone electronics to a Hong Kong company through an intermediary.

According to The Wall Street Journal, Tether has become one of the standard black market payment methods in the world. It is claimed that this digital currency is backed by the US dollar. one to one . But unlike dollars issued by the state within the banking system, the authorities have limited ability to track their use around the world.

For the Russian military machine, Tether has become indispensable. It helps Russian companies circumvent Western sanctions and purchase so-called dual-use goods, which include drones and other high-tech equipment. Importers dealing with such goods make transfers in rubles to Russian bank accounts managed by intermediaries who convert the rubles  and pay local currency to their foreign suppliers in places like China and the Middle East.

The U.S. Treasury Department has been pressuring Congress to pass legislation that would give it the ability to block transactions in U.S. dollar-denominated stablecoins such as Tether. Last week, the agency blacklisted a Moscow-based company that worked with a sanctioned Russian bank to provide Tether-based payments.

"Russia is increasingly turning to alternative payment mechanisms to circumvent U.S. sanctions and continue to finance its war against Ukraine," said Brian Nelson, the Treasury's Under Secretary for Terrorism and Financial Intelligence, in a statement.

Tether's private issuer, Tether Holdings, registered in the British Virgin Islands and owned by a small group of individuals, distributes Tether to customers in exchange for dollars it has invested in U.S. Treasury bonds. Customers trade Tether through virtual public ledgers known as blockchains or through private exchanges, sometimes to buy other cryptocurrencies or, as in the case of Russia, to pay for goods and services.

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As a result of the cooperation between Kyiv Scientific Research Institute of Forensic Expertise and foreign media, three people were arrested in the Netherlands who were supplying goods for military needs to Russia in circumvention of sanctions.

"We are sincerely grateful to the international investigators whose professional activities help to block Russian routes of illegal supply of foreign microelectronics to equip enemy missiles and drones. Among the latter, we have a successful case of cooperation with journalists from the Netherlands. Their investigation led to the arrest of three people as part of a multinational investigation into an international smuggling network that was working to circumvent European sanctions against Russia. Such small local steps help to increase the effectiveness of sanctions pressure on the aggressor country," said Oleksandr Ruvin, Director of Kyiv Scientific Research Institute of Forensic Expertise.