Putin overestimated ability to bypass sanctions with cryptocurrency, FBI boss says – The Denver Gazette

FBI Director Christopher Wray said Thursday that the Russians "highly overestimated" their ability to circumvent international sanctions through the use of cryptocurrency.

Wray added that there have been some "very significant seizures" of Russian-owned cryptocurrency since Russian President Vladimir Putin launched his invasion of Ukraine in late February.

"The Russians' ability to circumvent the sanctions with cryptocurrency is probably highly overestimated on the part of maybe them and others," Wray said Thursday during a hearing before the Senate Intelligence Committee. "We are, as a community and with our partners overseas, far more effective on that than I think sometimes they appreciate."

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"We have built up significant expertise both at the FBI and with some of our partners, and there have been some very significant seizures and other efforts that I think have exposed the vulnerability of cryptocurrency as a way to get around sanctions," Wray added.

Wray's comments were an apparent dig at cryptocurrency critics such as Sen. Elizabeth Warren, a Massachusetts Democrat, who has labeled digital decentralized currencies a threat to national security and has suggested Russian oligarchs are actively bypassing economic sanctions through their use.

"We're going after two things: trying to squeeze the Russian economy and also trying to squeeze those oligarchs, right? The problem is, we're doing that only through the formal banking system," Warren said Tuesday. "Those oligarchs can move a lot of money or store a lot of money or hide a lot of money through crypto."

Warren warned Treasury Secretary Janet Yellen in a letter last Wednesday that Russian actors may use cryptocurrency as a tool for sanctions evasion.

"Strong enforcement of sanctions compliance in the cryptocurrency industry is critical given that digital assets, which allow entities to bypass the traditional financial system, may increasingly be used as a tool for sanctions evasion," Warren said in the letter, which was also signed by Senate Intelligence Committee Chairman Mark Warner, Banking Committee Chairman Sherrod Brown, and Armed Services Committee Chairman Jack Reed.

Republican lawmakers have also expressed concern that Russians may leverage cryptocurrencies to evade sanctions.

"Cryptocurrency is rearing its ugly head here," Sen. Lindsey Graham said last week. "As you sanction the [Russian] central bank, which is a good thing, I worry about how the cryptocurrency could be used by the Russians to stay afloat."

But a Treasury Department official told NBC News on Tuesday that Russians won't find cryptocurrency an effective tool to evade sanctions.

"It will be extremely challenging to evade our sanctions without detection," the unnamed official told NBC News. "Treasury has been significantly increasing its ability to track virtual currency transactions via partnerships across the [federal government] and with the private sector."

Coinbase, the largest cryptocurrency exchange in the United States, announced Monday it blocked 25,000 accounts linked to Russian people and entities that the company believed to be "engaging in illicit activity."

Coinbase Chief Legal Officer Paul Grewal explained that cryptocurrency transactions are "traceable, permanent, and public" and that digital assets "have properties that naturally deter common approaches to sanctions evasion."

President Joe Biden signed an executive order Wednesday ordering the federal government to create assessments and action plans to mitigate the risks that illicit use of digital currencies pose to the financial and national security sectors.

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Biden's order also accelerates the research and development of an official U.S. Central Bank Digital Currency "should issuance be deemed in the national interest."

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