As cryptocurrency is becoming increasingly intertwined with the traditional financial world, it’s also forming the foundation of a parallel, shadow financial system.
A January report from TRM Labs found a surge in illicit or illegal crypto use to an all-time high of $158 billion. This included a massive increase in crypto flows related to sanctions evasion.
This was led primarily by A7A5, a Russian ruble-based stablecoin launched by Russia-based company A7. Some $39 billion in sanctions-related crypto flows were attributed to the A7 wallet cluster.
Far from a small, underground system for illicit activity, A7A5 has facilitated billions of dollars’ worth of commercial activity, creating a “shadow” economy built on crypto.
Sanctions and the rise of A7A5
After Russia invaded Ukraine in February 2022, it faced a raft of sanctions excluding the country and companies based there from participating in the global financial system.
Mastercard and Visa suspended international operations for cards issued in Russia, while cards issued abroad stopped functioning in the country. Russian banks were also closed off from SWIFT, severely limiting the ability of companies based in the country to conduct commerce abroad.
While these major Western payment networks were shut off, alternatives grew. Mir, the Russian payment network founded in 2017, expanded its market share after Visa and Mastercard’s exit.
Russia also turned to crypto for international commerce. In December 2024, Russian Finance Minister Anton Siluanov noted that his government had passed legislation authorizing foreign trade in “digital financial assets” and Bitcoin (BTC) that was mined in Russia. While Siluanov did not recommend crypto as a form of investment, he claimed that it was “the future” in the context of global payments settlement.
Enter A7A5. The coin was first introduced in February 2025 by the eponymous A7 financial platform. According to legal and professional services firm Astraea Group, A7 is co-owned by Moldovan oligarch Ilan Shor, himself sanctioned and residing in Russia, and the state-owned Promsvyazbank (PSB), which has strong ties to Russia’s defense industry.
Shor and PSB developed a group of companies in strategically important sectors like oil, gas, metals, chemicals and defense technologies. These include A7-Agent, A7 Goldinvest and A71.
A7A5’s blockchain contract launched in February 2025 and soon began trading on Moscow-based exchange Garantex, which was subsequently sanctioned and shut down.
Trading has continued on Grinex. According to Chainalysis, this Kyrgyzstan-based exchange is the confirmed successor of its Russian counterpart and was accepting transfers from Garantex immediately after its sanction-induced closure.
The token was also launched on Kyrgyzstan-based platform Meer, as well as Bitpapa. Despite sanctions from the Office of Foreign Assets Control (OFAC) on all these platforms, token asset growth exploded in 2025.
Token growth spiked after trading began on Bitpapa. Source: ChainalysisCreating an alternative, sanctions-proof system
Analysts have noted that the illicit crypto economy has evolved beyond the darknet and ransomware but has become a separate, robust financial system for sanctioned actors.
Ari Redbord, global head of policy at TRM Labs, said, “State-aligned actors, professional criminals and sanctions evaders are no longer experimenting with crypto; they’re operating durable financial infrastructure onchain.”
He continued that, in 2025, Russia’s illicit crypto ecosystem “evolved into something far more deliberate … Wallets tied to the A7 network alone accounted for at least $39 billion, reflecting coordinated, state-aligned financial infrastructure built for sanctions evasion, not broad market use.”
State coordination with A7A5 and tie-ins with the broader Russian financial market are further evidenced by daily asset flows, according to Chainalysis. The vast majority of trades occur Monday through Friday, with the largest number of trades at the beginning of the week.
Source: Chainalysis“These trading patterns suggest that A7A5 is primarily being used by businesses operating Monday through Friday, which would align with Russia’s legislative goals of facilitating cross-border transfers for Russian businesses via cryptocurrency,” wrote Chainalysis.
Andrew Firman, head of national security at Chainalysis, told Radio Free Europe in December 2025, “The A7A5 token development seems like Russia’s next logical step in Russia’s efforts to develop alternative payment systems to circumvent sanctions.”
In its report, TRM Labs stated that A7A5 volumes don’t represent sanctions evasion but sanctioned activity “more broadly, including state-aligned economic flows.”
“These dynamics illustrate how Russia-linked actors are increasingly leveraging crypto — particularly stablecoins and higher-risk services — as part of a long-term, nation-state-backed strategy.”
Oleg Ogienko, A7A5’s director for regulatory and overseas affairs, has told crypto news media that his company is not violating the laws of Kyrgyzstan, where doing business with Russian companies is not prohibited. He added that the company conducts Know Your Customer and Anti-Money Laundering procedures, as well as audits, and doesn’t violate Financial Action Task Force principles.
A company spokesperson previously told Cointelegraph that accusations of sanctions evasion “are politicized and lack factual evidence.”
“Companies and individuals globally use the A7A5 ruble stablecoin for export-import contracts, cross-border payments and blockchain projects. Its growth reflects a nondiscriminatory approach to value transfer on the blockchain,” they said.
Ambitions for further growth in the sector are apparent. In July, A7A5 announced that PSB cardholders will be able to purchase tokens with their cards. It plans to extend this service to other banks in the future.
In the space of a year, A7A5 has grown into an effective alternative payment rail for sanctioned parties. Time will tell how much appetite there is to grow this further.
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