IRS Sponsoring Chainalysis for Ukrainian Agents to Hunt for Russian Wallets
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IRS Sponsoring Chainalysis for Ukrainian Agents to Hunt for Russian Wallets

Ukrainian law enforcement is utilizing Chainalysis tools and trading offered by the IRS to hunt down Russian sanctions evaders.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

According to a report from Thursday, May 11th, the Internal Revenue Service is working closely with Ukrainian law enforcement to prevent Russians from using cryptocurrencies for evading sanctions. The US is allegedly both training Ukrainian agents and sponsoring their access to Chainalysis tools to help them track on-chain activity.

IRS Working Closely With Ukrainian Law Enforcement to Track Russian Blockchain Activity

The IRS is reportedly helping train and supply Ukrainian law enforcement to better track down Russians attempting to use cryptocurrencies to evade sanctions imposed upon their country. The training is conducted both in person and via digital channels of communication.

The US is also allegedly sponsoring Ukrainian agents’ access to tools offered by Chainalysis—a blockchain analysis firm. Fears that Russia may attempt to utilize digital assets to evade sanctions emerged soon after its invasion of Ukraine started in February 2022.

Last March, the FBI dismissed these fears, for the most part, stating that the nation would need fiat, not digital assets to maintain access to the global financial system, but some recent developments hint that Russia is indeed attempting to utilize digital assets. Commenting on its partnership with Ukraine, IRS Criminal Investigation Chief Jim Lee stated that the collaboration is helping safeguard both the US financial system and the global economy.

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Do Countries Use Crypto to Evade Sanctions?

The efforts to curtain Russian evasion of sanctions using cryptocurrencies have already gone beyond the scope of law enforcement agencies. A recent blog post by Chainalysis tells the story of an unknown Ukrainian blockchain vigilante who used around $300,000 to help flag and dox Bitcoin addresses used by the Russian military. 

The US Department of Justice has also been actively looking into the issue of sanctions evasion. Last week, it reportedly initiated an investigation of Binance over alleged sanctions variations by Russian individuals and entities. The world’s largest cryptocurrency exchange was also accused of aiding Iranian firms to similarly violate sanctions. 

Additionally, Iran made history in the summer of 2022 when it used digital assets for international trade. More recently, in early 2023, it entered into negotiation with Russia on the possible use of a gold-backed stablecoin.

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Do you think Russia is extensively using cryptocurrencies to evade sanctions? Let us know in the comments below.