Alexander Browder – Written Evidence (STA0028)

 

 

  1. My name is Alexander Browder. I am founder of the Global Cryptocurrency Laundering Database and author of the report “Confronting the Illicit Finance Hydra in Crypto Markets: Protecting Retail Investors and Disrupting Hostile Government Exploitation” published by the Henry Jackson Society.

 

  1. I appreciate the opportunity to provide this written response to the House of Lords Financial Services Regulation Committee Inquiry into the growth and proposed regulation of stablecoins in the UK.

 

  1. I commend the Committee for undertaking this timely inquiry.

 

  1. I have created the Global Cryptocurrency Laundering Database based on open sources, available court records, published indictments, announcements of law enforcement action,  investigative and analytical reports.

 

  1. This is the first and the largest open-source database of cryptocurrency laundering. It spans 164 cases across 20 years.

 

  1. Drawing upon the cases in the database, I authored a report examining major trends and patterns in illicit cryptocurrency flows.

 

  1. One of the major developments identified in the report is a shift in the choice of digital instrument: from bitcoin to stablecoins.

 

  1. Originally, bitcoin accounted for the lion’s share of illicit usage. This was due to bitcoin being the major virtual asset with the highest volume of transactions.

 

  1. However, partly due to the volatility of this virtual asset, where it has been seen to drop in value as much as 50% in one week, criminals have started to move away from bitcoin to stablecoins.

 

  1.                     Stablecoins are pegged to some real value like dollar or gold, making launderers feel safer holding the asset. This has caused stablecoins to explode in popularity, and with that their use for illicit purposes has also sharply increased.

 

  1.                     North Korea’s Lazarus Group uses stablecoins to buy military equipment, Iran’s Islamic Revolutionary Guard Corps (IRGC) uses them to source drone components, and terrorist networks and drug trafficking organizations also rely on stablecoins to fund their operations.

 

 

  1.                     Industry estimates indicate that USDT, launched by Tether, is the largest stablecoin today, and it is also used in the majority of illicit flows.

 

  1.                     Tether and other stablecoins platforms have the ability to freeze funds. Therefore, they need to act decisively in order to identify, block and deter bad actors.

 

  1.                     If they don’t, harsher fines and enforcement should be implemented to combat the activity of hostile actors on stablecoin platforms.

 

Russian Sanctions Evasion using stablecoins

 

  1.                     A second major development has been the emergence of a Russian stablecoin specially designed to evade sanctions, called A7A5. 

 

  1.                     A7A5 is a ruble-pegged stablecoin. It was launched in January 2025 by a UK-sanctioned Moldovan citizen named Ilan Shor, in partnership with the UK-sanctioned Russian bank, Promsvyazbank.

 

  1.                     The token was created by a Moscow-based A7 LLC, a cross-border payment service that is 51%-owned by Ilan Shor and 49%-owned by Promsvyazbank. A7 LLC has been sanctioned by the UK.

 

  1.                     It has become a critical tool for the Russian sanctions evasion, money laundering and illicit cross-border payments.

 

  1.                     A7A5 has been reported to have processed tens of billions of dollars in transactions and facilitated illicit financial flows for Russian persons circumventing Western sanctions.

 

  1.                     A7A5 is backed by deposits at Promsvyazbank. It is issued through a Kyrgyzstan-registered company, Old Vector LLC, which has been sanctioned by the UK for its role in supporting the Russian Government and its financial services sector.

 

  1.                     Ilan Shor has been convicted in Moldova and sanctioned in the UK under the Global Anti-Corruption Sanctions Regulation 2021. Shor has also been sanctioned by the EU and the US.

 

  1.                     A7 and Old Vector have been sanctioned by the UK, the EU and the US.

 

  1.                     The UK, the EU and the US have also sanctioned Grinex LLC, a Kyrgyzstan-based cryptocurrency exchange where A7A5 has been trading. The UK has also sanctioned CJSC TengriCoin, the Kyrgyzstan-based operator of Meer exchange which also facilitates transactions in A7A5, for its role in supporting the Russian Government and its financial sector.

 

  1.                     Despite the sanctions, A7A5 continues to operate. Moreover, in October 2025, A7A5 participated at TOKEN2049, an industry conference held in Singapore. A7A5 was described as ‘platinum sponsor’ of the conference, displayed a booth there, and its representative appeared to speak.

 

  1.                     The reason A7A5 continues to operate is through its ability to be converted from A7A5 to other stablecoins and fiat currencies on specific exchanges.

 

  1.                     These transactions are carried out on crypto exchanges based in Kyrgyzstan. These include UK-sanctioned Grinex and Meer. UK-sactioned Old Vector, the issuer of A7A5, is also registered in Kyrgyzstan. Kyrgyzstan has been completely uncooperative in shutting down this sanction-evasion scheme, thereby significantly interfering with the effectiveness of the UK sanctions regime.

 

  1.                     The UK Government should impose sanctions on the senior Kyrgyzstan Government officials responsible for aiding this sanctions evasion. Specifically, the UK should sanction the Kyrgyzstan’s head of the central bank, Kyrgyzstan’s general prosecutor and Kyrgyzstan’s head of the main financial regulator.

 

  1.                     If Kyrgyzstan continues to flaunt UK sanctions, broader sectoral sanctions should be imposed, in cooperation with the EU.

 

Conclusion

 

  1.                     The rise of the Russian stablecoin A7A5 at present poses a serious national security threat. It should be addressed by the UK Government and our partners with the imposition of proper guardrails and consequences, to curb the massive sanctions evasion activity.

 

 

6 March 2026