The UK government applied Regulation 17A to crypto exchanges for the first time on May 26, 2025, freezing funds and ordering financial firms to sever ties with 18 designated entities. The sanctions hit Huobi (HTX) exchange, a Kyrgyzstan-linked stablecoin issuer, and the core target: the A7 network, a Kremlin-backed system that allegedly moved more than $90 billion last year alone.
The A7 network's Kremlin pipeline
Regulation 17A was previously reserved for banks. Its extension to crypto marks a sharp escalation. The UK says A7 was founded in October 2024 and is majority-owned by Ilan Shor, an Israeli-Moldovan oligarch convicted for a $1 billion bank theft. Minority owner Promsvyazbank is a Russian state-owned bank sanctioned since 2022. Chainalysis reports that A7's ruble-backed stablecoin A7A5 processed $93.3 billion in transactions in under a year. The network opened a physical branch in Vladivostok in September 2025, with Vladimir Putin attending the virtual ribbon-cutting. It has since expanded into Lagos and Harare.
Why Huobi was named
Huobi (HTX), advised by Justin Sun and handling $3.3 trillion in trading volume in 2025, was sanctioned for alleged ties to the network. TRM Labs traced $4.9 billion in direct transfers from HTX to UK-designated entities since 2021, including $1.95 billion to Garantex in 2022 and $838 million to A7 in 2025. The UK government assessed that one exchange in the network channeled at least $1.5 billion back toward the Kremlin. HTX disputed the accusations, stating they apply only to Huobi Global S.A. as a separate legal entity and that its exchange operations and user funds remain unaffected.
Russia's crypto workaround and the sanctions squeeze
Western sanctions have stripped more than $450 billion from Russia's economy since 2022, equivalent to two years of war funding. Russia's Economy Ministry cut its 2026 growth forecast from 1.3% to 0.4%. Russian businesses had turned heavily to Tether's USDT for international transactions after 2022 sanctions, but US authorities seized Garantex's USDT holdings in March 2025 and Tether froze wallets linked to the sanctioned exchange. The UK's move further limits Russia's ability to use crypto to bypass financial restrictions.
The UK has not yet announced further actions, but the application of Regulation 17A to crypto sends a clear signal: exchanges that facilitate sanctions evasion are now in the crosshairs.
