Analysts at TRM Labs highlight that Russian-speaking ransomware groups accounted for nearly 70% of all crypto proceeds from ransomware in 2023. This significant figure reflects Russia’s growing involvement in ransomware activities, with these groups amassing approximately $500 million in crypto proceeds.

Key Players in Ransomware: Lockbit and ALPHV/Black Cat

According to a recent report, two prominent Russian ransomware operators, Lockbit and ALPHV/Black Cat, collectively generated attack revenues of at least $320 million. Lockbit, now under sanctions, targeted major entities such as Boeing and the UK’s postal operator Royal Mail in 2023. Meanwhile, BlackCat/ALPHV directed its efforts toward MGM Resorts and a Fortune 500 distributor of dental and medical supplies, Henry Schein.

Sanctioned Entities and Crypto Volumes

The report also indicates that a significant portion of the world’s sanctioned crypto volume was concentrated on a single Russia-based exchange, Garantex. This Moscow-headquartered trading firm accounted for over 80% of crypto volumes associated with sanctioned entities globally in 2023. These entities include crypto exchanges and individuals subject to U.S. and international sanctions regimes.

Sanctioned Crypto Activities

Some of Garantex’s crypto volume is used to purchase military equipment and critical components for Russian forces in Ukraine from sanctioned Chinese manufacturers. This equipment includes commercial UAVs, anti-UAV equipment, thermal optics, integrated circuits (ICs), GPS modules, and tantalum capacitors essential for Russian weapons systems production.

This equipment includes commercial UAVs, anti-UAV equipment, thermal optics, integrated circuits (ICs), GPS modules, and tantalum capacitors critical to production of Russian weapons systems.

TRM Labs also notes that not all this volume relates to sanctioned assets. It may also encompass the sale of other goods not related to the war effort, indicating broader cross-border trade between Russia and China settled in crypto.

Russia’s Increasing Reliance on Crypto

Russia is increasingly using crypto as a payment method to circumvent sanctions and maintain cross-border trading activity. This trend continues despite the legal prohibition of crypto as a legal tender within the country, creating ambiguity regarding the classification of these trades.

Legislative Developments

Recently, the Russian parliament passed two crypto-related bills in the first of three readings. If enacted, these laws would allow the use of crypto for international trade and officially recognize and regulate crypto mining. This legislative move follows reports that Russian metal producers have started using stablecoins for transactions with China due to severe limitations on traditional payment methods caused by sanctions.

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