Crypto Copper’s $4.2 Million Transfer to a Sanctioned Russian Arms Dealer Jonatan Zimenkov

The reported transfer of digital assets totaling over $4.2 million to a wallet linked to a Russian arms dealer Jonatan Zimenkov by UK-based crypto firm Copper Technologies raises significant concerns about potential illicit financial activities and violations of international sanctions.

Such transactions could facilitate the procurement of arms and ammunition, contributing to instability and conflict in regions where these weapons are deployed. The involvement of cryptocurrency in these transfers highlights the challenges of regulating digital asset transactions and the need for enhanced oversight to prevent their misuse for illicit purposes.

Jonatan Zimenkov, a 29-year-old Russian citizen, faced US sanctions in February 2023 for allegedly supporting the Russian military during the Ukraine invasion as part of the “Zimenkov network” led by his father, Igor Zimenkov.  As reported by the Guardian, these transfers occurred in May 2021, predating any sanctions against Zimenkov.

Crypto Firm Copper Sends $4.2M to Jonatan Zimenkov

Blockchain records show that Copper transferred over 1,700 units of Ethereum, valued at over $4.2m in May 2021, to Zimenkov. These transfers were conducted through two transactions on the same day, Etherscan data showed.

According to OFAC, the Zimenkov network had engaged in various activities, including deals related to Russian cybersecurity and helicopter sales overseas. Additionally, there were efforts to provide weapons to a country in Africa.

The involvement of Copper Technologies in transferring digital assets to a wallet associated with a sanctioned individual raises concerns about the firm’s due diligence practices and compliance with anti-money laundering (AML) and know-your-customer (KYC) regulations. While Copper may not have been implicated in any wrongdoing at the time of the transaction, the subsequent identification of the recipient’s wallet address in a US Treasury announcement suggests a potential connection to a sanctioned entity.

It is essential for crypto firms to conduct thorough risk assessments and screening processes to ensure that their transactions comply with international sanctions and regulatory requirements. Failure to do so could result in severe legal and reputational consequences for the firm. Additionally, regulators and law enforcement agencies must closely monitor cryptocurrency transactions to detect and prevent sanctions evasion and illicit financial activities

US Sanctions Against Zimenkov

 The US sanctioned him in Feb. 2023 for allegedly assisting the Russian military in the Ukraine invasion as part of the “Zimenkov network.” This network was led by his father, Igor Zimenkov.

Today’s action targets a Russian sanctions evasion network led by Russia- and Cyprus-based arms dealer Igor Vladimirovich Zimenkov (Igor Zimenkov). Persons in this network (the “Zimenkov network”) have engaged in projects connected to Russian defense capabilities, including supplying a Russian company with high-technology devices after Russia launched its full-scale invasion of Ukraine on February 24, 2022. Certain members of the Zimenkov network have also supported sanctioned, state-owned Russian defense entities Rosoboroneksport OAO (Rosoboroneksport) and State Corporation Rostec (Rostec), which are key parts of Russia’s military-industrial complex. Rosoboroneksport was previously sanctioned pursuant to E.O. 14024, E.O. 13582, and E.O. 13662, and Rostec was previously sanctioned pursuant to E.O. 13662 and E.O. 14024.

Igor Zimenkov has worked closely with his son Jonatan Zimenkov and a broad network of individuals and entities to enable Russian defense sales to third-country governments. As part of these efforts, Igor and Jonatan Zimenkov both had direct correspondence with sanctioned Russian defense firms. They have additionally been involved in multiple deals for Russian cybersecurity and helicopter sales abroad and have engaged directly with Rosoboroneksport’s potential clients to enable sales of Russian defense materiel. Igor Zimenkov maintains close relationships with personnel of sanctioned Russian state-owned enterprise Rosoboroneksport and has provided information to Rostec personnel abroad. Jonatan Zimenkov has maintained Powers of Attorney for companies in the Zimenkov network on behalf of his father, Igor Zimenkov.

In addition, Igor Zimenkov has supported the Belarusian military-industrial complex by facilitating sanctioned Belarusian defense entity State Owned Foreign Trade Unitary Enterprise Belspetsvneshtechnika (BSVT)’s sales efforts in Latin America. BSVT was previously designated pursuant to Belarus-related E.O. 14038 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, the Government of Belarus, as well as for operating or having operated in the defense and related materiel sector of the Belarus economy.

Today, Igor Zimenkov was designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy. Jonatan Zimenkov was also designated pursuant to E.O. 14024 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Igor Zimenkov, and for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Rosoboroneksport, a person whose property and interests in property were previously blocked pursuant to E.O. 14024.

ZIMENKOV NETWORK MEMBERS

The Zimenkov network has used front companies to funnel money within the network while attempting to maintain a lawful appearance. Singapore-based Zimenkov network shell company Asia Trading & Construction PTE Limited (Asia Trading) and its director, Serena Bee Lin Ng, have sold helicopters to a Latin American government on behalf of Rostec.

Today, Asia Trading was designated pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, Rostec, a person whose property and interests in property were previously blocked pursuant to E.O. 14024. Serena Bee Lin Ng was designated pursuant to E.O. 14024 for being or having been a leader, official, senior executive officer, or member of the board of directors of Asia Trading.

Texel F.C.G. Technology 2100 Limited (Texel) has engaged in extensive funds transfers to Asia Trading. Among other projects connected to Russian defense capabilities, Texel and its CEO, Marks Blats, have supplied a Russian company with electro-optic and infrared devices following the start of Russia’s full-scale invasion of Ukraine in February 2022. Marks Blats is a high-level Zimenkov network associate and a business partner of sanctioned Belarusian individual Aliaksandr Zaitsau, who was previously designated pursuant to Belarus-related E.O. 14038. In addition, OFAC took action against Elektrooptika SIA, which is owned by Marks Blats. Elektrooptika SIA purports to operate in the business services industry.

Today, Texel was designated pursuant to E.O. 14024 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Asia Trading. Marks Blats was designated pursuant to E.O. 14024 for being or having been a leader, official, senior executive officer, or member of the board of directors of Texel. Elektrooptika SIA was designated pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, Marks Blats.

GBD Limited is a Zimenkov network company that has attempted to supply weapons systems to an African government and has sent millions of dollars to Igor Zimenkov over a period of years. Alexander Volfovich is a Cyprus-based arms broker and Zimenkov network associate. In addition to being an owner and director of GBD Limited, Alexander Volfovich is the public, registered owner of the following six companies in the Zimenkov network:

• Mateas Limited, located in Cyprus.
• Kliosa Limited, located in Cyprus.
• VFC Solutions LTD, located in Cyprus.
• U-Stone Limited EOOD, located in Bulgaria.
• GMI Global Manufacturing & Integration Limited, located in Cyprus, and involved in a contractual relationship between Alexander Volfovich and Jonatan Zimenkov.
• D.E.S. Defense Engineering Solutions LTD, located in Israel, and which is linked to Russian state military manufacturers.