The US Department of the Treasury’s Office of Foreign Assets Control has sanctioned four individuals for allegedly attempting to influence the 2018 midterm elections.
The accused individuals reportedly laundered over $1mln through various cryptocurrency wallets in order to bankroll efforts to promote unsubstantiated allegations about various political figures and incite civil unrest.
Cryptocurrency analysis firm Elliptic released a report on September 11 that described some of the details which coincided with the US department of Justice releasing its affidavit in support of a criminal complaint and arrest warrant.
Four individuals identified
One of the accused, Andrii Derkach is an Ukranian member of parliament, who allegedly played a role in orchestrating the attempts to influence the 2018 midterm elections.
Three Russian nationals, namely Artem Lifshits, Anton Andreyev, and Darya Aslanova have also been sanctioned by the US department of Justice. The three Russians are allegedly employees of St Petersburg-based Internet Research Agency (IRA) and stand accused of aiding efforts to interfere in elections.
The legal documentation alleges that a Russian group known as Project Lakhta has been operating in America since 2014, carrying out various covert operations in the country aimed at disrupting political and electoral processes.
Members of the organisations traveled to the United states to collect intelligence and establish computer networks in order to carry out various interference programs. Part of this was building a web of fictitious social media accounts to reach millions of Americans.
According to the criminal complaint, Project Lakhta’s Translator Department looked to influence US citizens through social media platforms including Youtube, Facebook, Instagram and Twitter. The goal was to ‘sow discord in the United States political system, incite civil unrest, and polarize Americans by promoting socially divisive issues’ with a focus on racial divisions and economic inequality.
The group also managed to get hold of fake identity documentation and bought stolen identities of US citizens to open bank accounts and wallets on various cryptocurrency exchanges.
Using crypto, but not smartly
Elliptic carried out a track and trace of various cryptocurrency transactions that were used by the operatives to obtain identity documentation and for various other activities.
The 23 cryptocurrency addresses that were listed in the OFAC complaint included 14 Bitcoin addresses, 3 Ethereum addresses, 3 Litecoin addresses and single Zcash, Dash and Bitcoin SV addresses.
Of the more that $1mln that was funneled through these accounts, over $600,000 was moved through Bitcoin between May 2017 and January 2019.
The accused could have done more to make their transactions more conspicuous. As pointed out by Elliptic, Andreyev was linked to Zcash address which is a privacy coin. However the group used a Zcash transparent address which means that the amounts received by the address can be viewed.
Furthermore the majority of the cryptocurrency that was used went through mainstream cryptocurrency exchanges, although they were set up using stolen or fake US identification documents. Elliptic suggests that the exchanges used did not enforce high standards to identify its users:
v“They may have chosen to operate in this way because of the low standards of KYC and AML controls in force at these exchanges – presenting a low risk of being identified through use of these services.”