As the US Senate debates the Genius Act, a $530 million crypto laundering case involving a Russian national intensifies scrutiny of stablecoins and their use in sanctions evasion.
Russian Crypto Laundering Case Intensifies Debate Over Stablecoin Legislation
Criminal charges against a Russian tech entrepreneur accused of laundering hundreds of millions of dollars through stablecoins have drawn fresh scrutiny to a proposed US law that seeks to regulate the cryptocurrency sector.
Iurii Gugnin, also known as George Goognin, is accused of using his fintech startup, Evita, to help Russian clients—including those from sanctioned banks—evade US financial restrictions by transferring funds through stablecoins and into US bank accounts. Prosecutors allege Gugnin moved more than $530 million through cryptocurrency wallets and American banking systems.
Genius Act Under Fire Amid Stablecoin Loopholes
As the case unfolds, the Senate is preparing to finalize the Genius Act, a bill that would create a regulatory framework for stablecoins and establish clearer anti-money-laundering rules for digital currencies.
However, the legislation has already drawn criticism from Democrats who argue it lacks the necessary enforcement mechanisms to prevent crimes like those allegedly committed by Gugnin. They’re calling for amendments that would mandate stricter oversight of stablecoin issuers and close loopholes that currently allow anonymous transactions via crypto services such as mixers.
“This case is a flashing red light: without basic national security safeguards, our adversaries will use stablecoins to launder money, evade sanctions, and use shady crypto exchanges to hide their illegal activity,” said Sen. Elizabeth Warren (D., Mass.). “That’s why my colleagues and I have filed national security amendments to the Genius Act—and why the bill shouldn’t move forward without them.”
Tether’s Role Raises More Questions
According to US prosecutors, at least $365 million of the allegedly illicit transactions were conducted using Tether, the world’s largest US dollar-pegged stablecoin. Tether, which is operated by an El Salvador-based firm of the same name, has come under increasing scrutiny for its utility in illicit finance. The company has been actively lobbying lawmakers as they shape the Genius Act, and has publicly condemned the illegal use of its platform.
Cross-Border Transactions Amid Tightening Sanctions
After moving to the US in June 2022—just months after Russia’s invasion of Ukraine—Gugnin and Evita began facilitating transactions for clients in Russia, China, and the UAE, as Washington ramped up sanctions against Russian banks. Over the next two and a half years, the company is believed to have processed more than $2 billion in global transfers.
Clients would reportedly send Tether to Evita, which then deposited the funds into accounts at crypto exchanges. From there, the digital assets were converted into US dollars and sent to recipients via traditional banking systems.
Links to Russian Intelligence and Military Supply Chains
The charges against Gugnin align with broader investigations by The Wall Street Journal, which found that Tether is commonly used in transactions designed to bypass financial sanctions. One report detailed how Russian buyers used Tether to purchase weapons parts for the war in Ukraine. Another revealed that Evita’s clients included Garantex, a sanctioned Russian crypto exchange that has become a key conduit for funds entering and leaving the country.
Prosecutors also allege that Evita facilitated payments for a supplier to Rosatom, Russia’s state atomic-energy company. Other transactions reportedly funded the procurement of sensitive computer hardware and electronics under strict export controls.
In a separate court filing opposing bail, prosecutors disclosed that Gugnin’s iCloud account contained contact details of individuals linked to the Federal Security Service (FSB), Russia’s powerful intelligence agency.
As Congress debates the future of stablecoin regulation, the Gugnin case underscores the real-world implications of legislative gaps. Lawmakers now face growing pressure to ensure the Genius Act delivers robust tools to combat financial crime without stifling innovation in the digital asset space.
