U.S. Treasury Sanctions Russian Exchange Cryptex and Facilitator UAPS, FinCEN Names PM2BTC a Primary Money Laundering Concern
The United States Treasury's Office of Foreign Assets Control (OFAC) has designated the Russian-based exchange Cryptex and Sergey Sergeevich Ivanov, identified also as UAPS or TALEON, due to their involvement in facilitating financial transactions for various criminal activities, including fraud operations, ransomware payments, and darknet market dealings. Parallel to this, the Financial Crimes Enforcement Network (FinCEN) has labelled PM2BTC, a no-KYC (Know Your Customer) exchange linked to Ivanov, as a "primary money laundering concern" under the Combating Russian Money Laundering Act.
OFAC's Designation and FinCEN's Actions
The designation of Cryptex and UAPS by OFAC marks a substantial crackdown on crypto services implicated in money laundering. These entities have handled transactions exceeding $7.5 billion since their establishment. FinCEN's identification of PM2BTC emphasizes the continuing measures to curb illicit financial operations, noting PM2BTC’s involvement in laundering over $1 billion in transactions tied to ransomware activities and fraud. This represents FinCEN's second application of the 9714(a) section targeting cryptocurrency entities, following similar actions against Bitzlato in January 2023.
Law Enforcement Seizures
Accompanying these designations are several law enforcement actions undertaken by Dutch and U.S. authorities. The Netherlands' Financial and Tax Crime Investigation Services (FIOD) along with the National High Tech Crime Unit (NHCTU), aided by Chainalysis and Tether, seized €7 million in funds. The U.S. Department of State has also announced a reward of up to $10 million for information that leads to Ivanov's arrest or conviction. Further, the U.S. Secret Service and the U.S. Attorney’s Office for the Eastern District of Virginia unveiled an indictment against Ivanov and another Russian national, Timur Shakhmametov.
Understanding Cryptex, UAPS, and PM2BTC
Cryptex is a Russian-language instant exchange service that operates both trading and exchange platforms. In 2022, it introduced CryptexPay to facilitate payment processing in Bitcoin (BTC) and Litecoin (LTC) for high-risk businesses, explicitly promoting its non-compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations.
UAPS, also known as the Universal Anonymous Payment System, has been operational since 2013 and functions as an invite-only underground payment processor, servicing numerous fraud shops including the notorious Genesis Market and BriansClub. It uses a shared wallet infrastructure with PM2BTC, showcasing their interconnected nature.
Since its inception in 2014, PM2BTC has been closely associated with Ivanov and has processed large sums of money on behalf of ransomware operators and fraud entities, with nearly half of its funds coming from evidently illicit sources, as per the Treasury.
On-Chain Activities
Cryptocurrency transactions handled by Cryptex have reached nearly $7 billion, predominantly in BTC and LTC. Since late 2019, the received value of these transactions shifted towards fraud shops and entities involved in high-risk activities. On-chain analysis exhibits substantial interactions between Cryptex and UAPS, with UAPS transferring over $89 million worth of crypto to Cryptex in 2024.
Similarly, PM2BTC has facilitated hundreds of millions of dollars worth of transactions for illicit actors, delineating its significant role in cybercrime facilitation.
Global Crackdown on Fraudulent Infrastructure
These designations and actions by OFAC, FinCEN, and their international collaborators underline a concerted effort to dismantle the infrastructure supporting money laundering and cybercrime on a transnational scale. These measures signify substantial progress towards disrupting fraudulent services and ensuring enhanced security within the global financial landscape.
Source: Noah Wire Services