Crypto custodian Copper is at the center of controversy as it reportedly transferred over $4.2 million worth of cryptocurrency to an entity allegedly linked to a Russian arms-dealing network. A joint investigation by The Guardian and the International Consortium of Investigative Journalists (ICIJ) uncovered the connection between Copper and Jonatan Zimenkov, an Israeli-born Russian national who has been sanctioned by the U.S. government.
The analysis revealed that Copper transferred the crypto funds to a wallet belonging to Zimenkov, who is part of the Zimenkov network led by his father Igor Zimenkov. The U.S. Department of the Treasury has accused Jonatan Zimenkov of engaging in multiple deals for Russian cybersecurity and helicopter sales abroad, as well as facilitating sales of Russian defense equipment. However, it is important to note that there is no suggestion that Copper breached any sanctions or regulations during the transaction.
Interestingly, Zimenkov was not a registered client of Copper, which raises concerns about the custodian’s due diligence and disclosure processes. While financial institutions in the UK have the discretion to file suspicious activity reports, it is unclear whether Copper took any action in this case. The company has yet to release any public statements regarding the investigation.
This recent revelation follows a previous report by The Guardian, which disclosed that a sanctioned Russian banker, Mikhail Klyukin, sold $19 million worth of shares in Copper. The sale was orchestrated by Copper to address concerns after Klyukin, who controlled over 2% of the company, was sanctioned by the U.S. in March 2022.
Founded in 2018, Copper offers crypto-related services to companies looking to invest in or trade cryptocurrencies. CEO Dmitry Tokarev has previously condemned the Russian government’s military actions against Ukraine, stating that they do not represent the majority of the Russian people.