In March 2022, Mikhail Klyukin, a Russian banker who had been sanctioned by the White House, made headlines when he sold over £15 million in shares of UK-based cryptocurrency firm Copper Technologies. Klyukin, who held a 2% stake in the company, had been sanctioned due to his association with Sovcombank, a Russian lender closely linked to the Putin regime. This transaction raised concerns about the transparency of cryptocurrency transactions and the potential evasion of sanctions.
Copper Technologies, chaired by former Chancellor Philip Hammond, played a significant role in facilitating the sale of the shares. The London-based company, known for its expertise in building and managing digital asset investment systems, acted as an intermediary for the transaction. It converted the buyer’s payment in sterling into cryptocurrency before transferring it to Klyukin. The involvement of Copper Technologies in this transaction raised questions about the company’s compliance with regulations and the potential for circumventing sanctions.
Legal experts have expressed concerns regarding the transaction’s compliance with U.S. sanctions laws. The United States has a reputation for its strict enforcement of sanctions and prohibits financial dealings involving dollars or American citizens with sanctioned individuals. However, this particular transaction utilized non-U.S. currency and non-American entities, creating a legal gray area. The involvement of cryptocurrency in the deal further complicated matters, as an executive order issued by President Joe Biden explicitly prohibited deceptive transactions aiming to evade U.S. sanctions, including those involving digital currencies.
There is a possibility that this transaction could be viewed as a violation of the executive order, potentially attracting “secondary” sanctions from the U.S. These sanctions target companies or individuals that indirectly aid sanctioned entities, raising further legal concerns for Copper Technologies and those involved in the sale.
Copper Technologies has maintained that their actions in facilitating the sale were legal and compliant with all applicable sanctions laws. A representative of the company emphasized their commitment to anti-money laundering rules, regulatory guidelines, and sanctions laws. They stated that the purpose of the transaction was to sell shares owned by a firm connected to a sanctioned individual. To ensure compliance, the company sought external legal advice, reviewing the potential consequences of the sale before proceeding. Associates of Mikhail Klyukin have also confirmed that his businesses have complied with U.S. sanctions, including in the context of the sale of Copper Technologies shares.
Philip Hammond, who became the chair of Copper Technologies in January 2023, was reportedly unaware of the share sale. He only learned about it during a review of major shareholders after the transaction had taken place. While Hammond served as an advisor during the transaction, there is no evidence to suggest that he had any prior knowledge or involvement in the sale of the shares.
This controversial sale of Copper Technologies shares by Mikhail Klyukin, a sanctioned Russian banker, has drawn attention to the potential loopholes and complexities surrounding cryptocurrency transactions and the evasion of sanctions. The involvement of a high-profile company like Copper Technologies raises questions about their compliance with regulations and highlights the need for more robust monitoring and enforcement measures in the cryptocurrency industry.
The legal gray areas and potential violations of sanctions laws associated with this transaction serve as a reminder of the challenges faced by governments and regulatory bodies in an increasingly digitized financial landscape. It is crucial for policymakers and law enforcement agencies to stay vigilant and adapt quickly to address emerging risks and maintain the integrity of the global financial system.