Authorities in the United States and Britain have taken action against a money laundering network they say helped Russia’s ruling elite bypass international sanctions.
According to a report by the Wall Street Journal, at the center of the network is Ekaterina Zhdanova, a prominent Russian businesswoman known for her involvement in Tether’s rise in underground finance.
According to reports, Zhdanova led an organization called Smart Group, which allegedly helped convert large amounts of cash transferred to important clients into cryptocurrency.
Russian members of the network transfer Tether to Zhdanova
According to a WSJ report citing the U.S. Treasury, Russian members of the network transferred Tether to a digital wallet controlled by Zhdanova.
She is also accused of helping a client obscure the source of funds used to purchase property in the UK.
Zhdanova and five others are currently under sanctions, and she was blacklisted last year.
“The Russian elite seeks to exploit digital assets, particularly U.S. dollar-collateralized stablecoins, to evade U.S. and international sanctions and enrich themselves and the Russian government,” said Bradley Smith, Acting Under Secretary for Terrorism and Financial Intelligence at the U.S. Treasury.
Tether, one of the most widely used cryptocurrencies, operates as a stablecoin pegged to the U.S. dollar. Unlike government-regulated currencies, Tether transactions often occur outside the reach of traditional financial oversight.
🇷🇺 PUTIN: Who can stop #Bitcoin? Nobody. pic.twitter.com/MZOJl4CaZy
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While Tether Holdings, the British Virgin Islands-based issuer, is not directly affected by the probe, U.S. authorities are separately investigating the company for potential violations of financial crimes laws.
Messages recovered from Zhdanova’s Telegram account revealed that she had been conducting significant ruble-Tether transactions, with a digital wallet linked to her processing 350 million USD.
Her extensive ties to Russia are said to include the country’s new oligarchs and high-ranking officials.
Zhdanova, who once ran a luxury travel service and a boutique hotel in Moscow, was detained in France in late 2023 in connection with a separate money laundering investigation.
UK charges Smart Group with funding Russian spies
The UK’s National Crime Agency (NCA), working with the US Treasury, has accused the Smart Group of funding Russian espionage and laundering money for several criminal organizations, including the notorious Kinahan Cartel in Ireland.
The London-based network, believed to have been run by Zhdanova, is believed to have laundered around $19 million through cash transfers across the UK.
The NCA highlighted that cash transfers were often followed by almost instantaneous cryptocurrency transactions of the same value.
These funds were used by criminal organizations to purchase drugs and weapons without physically moving the funds out of the country.
According to reports, authorities have made 84 arrests in connection with the network.
Last week, Russian President Vladimir Putin signed a federal law recognizing digital currencies as legal property while introducing new tax rules for cryptocurrency mining .
The bill, detailed in an official document released on November 29, sets out tax rules and requirements for the cryptocurrency sector.
Russia’s enactment of regulations for cryptocurrency mining represents significant progress since it legalized it in August 2024.
The law, which came into effect on November 1, allows only registered Russian legal entities and entrepreneurs to mine cryptocurrencies.
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