A UK-based crypto firm, Copper, is under scrutiny for reportedly transferring $4.2 million in cryptocurrency to Jonatan Zimenkov, a known member of an international Russian arms dealing network, just before he faced sanctions from the US.
The move has raised questions about the involvement of crypto infrastructure firms in activities that may be circumventing sanctions.
Key Points
- Copper allegedly sent 1,700 ETH (worth $4.2 million) to Jonatan Zimenkov, an Israel-born Russian national, accused by the US OFAC of assisting his father Igor Zimenkov in evading sanctions and managing an arms dealing collective.
- Igor Zimenkov is believed to lead the Zimenkov network, accused by OFAC of selling military equipment to third-world countries on behalf of Russia while supporting entities crucial to Russia’s military-industrial complex.
- The OFAC sanctions highlight direct correspondence between Igor and Jonatan Zimenkov and sanctioned Russian defense firms, including involvement in deals related to Russian cybersecurity and helicopter sales abroad.
Investigative Findings
- The Guardian and ICIJ uncovered that Copper facilitated the transfer to Zimenkov by linking his crypto wallet address to those already sanctioned by the US.
- Reports suggest that the arms network operated for several years before Jonatan Zimenkov faced US sanctions in 2023.
- The purpose of the transactions and the origin of the funds remain unknown. However, The Guardian clarifies that it is not implying any violation of sanctions by Copper and acknowledges that Zimenkov is not a client of the crypto firm, releasing it from legal obligations at the time.
Copper’s Response
Copper, a crypto infrastructure firm, defended its actions, stating it takes compliance, legal, and regulatory obligations seriously. It claims to have operated in full compliance with all applicable standards, including sanctions prohibitions in the UK.
The company did not respond to specific queries about its relationship with Zimenkov, and Zimenkov himself declined to comment when approached by The Guardian.
Copper faced allegations last year of aiding a Russian oligarch, Mikhail Klyukin, in evading US sanctions. The firm was reported to have acted as an intermediary when Klyukin sold his 2% stake in Copper, valued at £15 million ($19 million) in May 2022.
Copper denied acting as an intermediary in Klyukin’s share sale and asserted that it aimed to divest shares held by a company associated with a sanctioned individual.
The revelations surrounding Copper’s alleged involvement in transferring funds to a sanctioned individual raise concerns about the role of crypto infrastructure firms in potential sanctions evasion. The situation underscores the need for heightened scrutiny and regulatory measures within the crypto industry to prevent illicit activities and maintain compliance with international sanctions.