Europe Must Strengthen Crypto Sanctions to Cut Off Russia’s War Funding

Someone recently asked me what mark out of 10 I’d give for the efforts of governments to tackle financial crime. It got me thinking about the West’s response to Russia’s full-scale invasion of Ukraine four years ago—and how it is now looking.

Back in 2022, many were pleasantly surprised by the speed and ambition with which Western governments sanctioned the Russian government, state-owned companies, and wealthy individuals. While these sanctions did not stop the war, they imposed real costs on those funding it. Four years later, however, those sanctions are beginning to look shopworn.

Why Sanctions Are Failing Against Russia

If they began at 7/10, they’re now scoring much lower. Several factors explain this decline:

• Donald Trump’s shifting stance: The former U.S. president has shown little interest in supporting Ukraine, complicating Western unity.
• Viktor Orbán’s obstruction: Hungary’s former prime minister has repeatedly undermined EU sanctions efforts.
• Rising oil prices: Trump’s recent actions in Iran have driven up global oil prices, benefiting Russia’s war chest and giving him political cover to ease sanctions.

As Tom Keatinge argues in his analysis, Europe must refocus its efforts on disrupting Russia’s payment mechanisms—particularly digital ones.

“The extent to which crypto activity supports Russia’s war effort is clear. Yet repeated initiatives to prioritize a concerted effort on this issue are ignored. This must change.”

Keatinge’s call is urgent. Russia’s crypto ecosystem has grown more sophisticated, making it harder to track and disrupt. Even if Western nations act, the diffuse nature of crypto—combined with platforms like Telegram hosting illicit markets—complicates enforcement.

Grinex’s Suspension: A Sign of Escalating Pressure?

Recent events suggest frustration with Russia’s ability to bypass sanctions. The sanctioned Russia-linked crypto exchange Grinex announced an immediate suspension of operations, citing a “large-scale cyberattack.” According to a statement posted on Telegram by the Kyrgyzstan-registered exchange, it lost around $13 million worth of USDT in the hack.

Grinex blamed Western intelligence agencies for the theft, stating:

“Today the attempts to destabilise our fatherland’s financial sector hit a new level, with the direct theft of the assets of Russian citizens and companies with the involvement of complex cyberattacks.”

Grinex is the successor to Garantex, which was shut down just over a year ago after years of pressure from Western law enforcement. While Western governments may not have directly targeted Grinex, the attack raises questions about who is behind it.

Given Western governments’ legalistic approach, a direct operation seems unlikely. Instead, the attack may be the work of hacktivists—possibly aligned with or working independently to disrupt Russia’s financial networks.