The United Kingdom has enacted sanctions against several cryptocurrency exchanges, including Huobi, along with a stablecoin issuer, in a bid to counteract Russia's circumvention of financial restrictions and its military financing in Ukraine.
The sanctions package, released by the U.K. Foreign, Commonwealth & Development Office, includes 18 entities and individuals tied to what officials term Russia’s "illicit financial infrastructure for fund transfers, goods procurement, and war sustenance."
Among the sanctioned entities are Huobi Global S.A., which operates the HTX exchange, along with Rapira Group LLC, Aifory LLC, Arvix LLC, and Bitpapa IC FZC LLC.
HTX ranks among the largest crypto exchanges globally, boasting a trading volume of approximately $3.3 trillion last year, as reported by blockchain analytics firm Elliptic in a blog post.
Elliptic noted that HTX is believed to have provided services to both the A7 payments network and Garantex, a Russian exchange that was previously sanctioned. Earlier this year, Garantex rebranded to Grinex and ceased operations last month following a $13 million hack attributed to state actors.
The UK also sanctioned Open Joint Stock Company “Virtual Asset Issuer,” a firm from Kyrgyzstan responsible for the USDKG gold-backed stablecoin, along with several individuals implicated in sanctions evasion, such as Sergey Mendeleev, Igor Gorin, Irina Akopyan, and Israeli citizen Liran Cohen.
This move represents one of the UK's most decisive actions to date against Russia's utilization of cryptocurrencies and alternative payment systems. For the first time, the U.K. has implemented Regulation 17A of its Russia sanctions to crypto exchanges, a measure previously reserved for sanctioned banks.
Under these regulations, U.K. financial institutions and cryptocurrency service providers are prohibited from maintaining correspondent relationships with the designated entities or processing related payments. They may also be required to freeze assets and trace blockchain transactions associated with the sanctioned platforms.
Elliptic pointed out that these rules could necessitate firms to track transactions through multiple blockchain "hops," extending compliance checks beyond direct counterparties to wallets and exchanges involved in any transaction chain.
A significant emphasis of the sanctions package is on the A7 payments network, which British officials claim facilitated the processing of revenues from Russian oil sales and supported military procurement efforts. The U.K. asserts that this network processed over $90 billion last year.
Elliptic indicated that other regulatory bodies are likely to monitor the U.K. closely as it pioneers a new approach to applying traditional financial sanctions to the digital asset sector.
The sanctions are effective immediately. CoinDesk reached out to Huobi for a response but had not received a reply by the time of publication.