Fugitive Moldovan oligarch Ilan Shor founded a cryptocurrency to help Russia circumvent sanctions. It has already been sold for over $9 billion

A new cryptocurrency token, A7A5, founded by Moldovan oligarch Ilan Shor to circumvent sanctions against Russia, has moved about $9.3 billion in four months. The token is traded on an exchange in Kyrgyzstan.

The Financial Times writes about this.

The A7A5 token, considered the first stablecoin pegged to the Russian ruble, was officially launched in Kyrgyzstan in February to ease Russia’s massive financial flows, which have been severely hampered by Western sanctions. An analysis of wallets linked to the Grinex cryptocurrency exchange, also recently launched in Kyrgyzstan, shows that the total amount of A7A5 moved on this exchange is $9.3 billion.

The stablecoin is said to be backed by ruble deposits at Moscow-based Promsvyazbank, a defense-sector bank that has been sanctioned by the US, UK and EU over its full-scale invasion of Ukraine. There are currently 12 billion tokens in circulation, equivalent to $156 million, and they are used by a relatively small group of users.

The A7A5 token also appears to be linked to Moscow’s attempts to use cryptocurrencies to fund political influence campaigns abroad, according to a new report from the Center for Information Resilience (CIR), a London-based nonprofit research group.

A7, the company originally behind the token and now under British sanctions, is owned by Moldovan businessman Ilan Shor, according to Russian corporate records. Shor escaped house arrest in Moldova in 2019 after being convicted of stealing $1 billion in the country’s largest banking fraud. He moved to Moscow and obtained Russian citizenship. In 2023, he was sentenced in absentia to 15 years in prison.

In its new report, the CIR found that several domains used in political influence operations in Moldova shared an IP address with A7 and A7A5. In a statement, A7A5 said that while it had “collaborated with A7’s technical team at an early stage,” last month it “decided to completely separate due to different visions of its development strategy”.

The stablecoin’s creation comes amid heightened scrutiny of Russia-related transactions for sanctions compliance and the exclusion of some Russian banks from the international interbank network SWIFT. Russian users can buy A7A5 tokens on the Tron or Ethereum blockchains, and then use them to buy USDT from Tether, a stablecoin pegged to the US dollar. From there, the user can withdraw money in any country or currency they want.

For every ruble used to purchase A7A5, one ruble is credited to a Promsvyazbank account, protecting the customer in Russia from the volatility of traditional cryptocurrencies. The company claims that the existence of these fiat reserves has been confirmed by an independent Kyrgyz auditor.

Analysts say that the Grinex exchange, which trades A7A5 and rubles, is likely the successor to the Russian cryptocurrency exchange Garantex, which was shut down in March as a result of US action. A few weeks before the blockade, a large amount of money held on Garantex in the cryptocurrency Tether was transferred to A7A5. Then, about $29 million worth of A7A5 tokens were transferred to Grinex.

An analysis of the transactions by the Financial Times shows that they take place almost entirely on weekdays, often during office hours in Moscow. In its investigation, the CIR found that Grinex and the issuer A7A5 were registered in Kyrgyzstan within the same week. Grinex denies the allegations and says it is independent of both Garantex and A7A5.

A7 was added to the UK sanctions list in May. Speaking at a forum last week, Shore said A7 is building a larger, more differentiated and “fairly invulnerable” new payment system. It will include securities exchanges and “depoliticized” instruments such as precious metals to avoid regulators. Cryptocurrency will be just one of the areas, he said.

CIR found A7 job postings for Chinese speakers, energy experts and accountants in the United Arab Emirates, Kyrgyzstan and Russian-occupied regions of Ukraine.

According to the US Office of Foreign Assets Control, Ilan Shor last year participated in negotiations with the Keremet Bank in Kyrgyzstan as part of plans to “create a sanctions evasion center where Russia could pay for imports and receive payments for exports”. The US imposed sanctions on the bank in January.

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