The United Kingdom on 26 May 2026 designated 18 entities and individuals for allegedly propping up Russia's sanctions-evasion network, in a package that marks the first-ever use of Regulation 17A of the Russia (Sanctions) (EU Exit) Regulations 2019 against cryptocurrency exchanges. The move instantly puts HTX — formerly Huobi, one of the world's largest exchanges with $3.3 trillion in reported trading volume in 2025 — under a compliance prohibition that until now applied only to banks.
HTX pushed back within 24 hours. "A7A5 was trying to list their stablecoin," an HTX spokesperson told CoinDesk on 27 May 2026. "However, following our rigorous internal due diligence and compliance review processes, their application was explicitly rejected." A7A5 executive Oleg Ogienko confirmed the approach to CoinDesk, acknowledging the exchange had turned down the listing: "All of them rejected our application almost at once because they are scared of secondary sanctions." Ogienko added the project no longer needs a centralized listing, saying A7A5 now "runs on DeFi infrastructure."
What Regulation 17A actually means. The provision goes further than a standard asset freeze. UK credit institutions and financial firms — including regulated crypto service providers — cannot maintain correspondent relationships with a designated entity, process any payment that has passed through a designated exchange, or provide settlement services. The prohibition captures indirect exposure: if a designated exchange appears anywhere in a transaction chain, the payment is prohibited. As Elliptic noted in its analysis of the package, this means UK VASPs "need to look beyond direct counterparties and trace the full path of funds" — multi-hop blockchain tracing is now a legal obligation, not an internal best practice.
The A7 network at the center. The FCDO's stated basis for designating HTX is "reasonable grounds to suspect" it assisted A7 LLC, operator of the A7A5 ruble stablecoin already sanctioned by multiple Western governments. The UK government said the A7 network claimed to have moved more than $90 billion last year — equivalent to roughly half of Russia's annual military expenditure — and suspects HTX channeled over $1.5 billion back into Russian state coffers. The Foreign Secretary, Yvette Cooper, said: "If the Kremlin thinks it can evade our sanctions by hiding behind crypto networks and shadow financial systems, it is gravely mistaken."
Broader package. Beyond HTX, the 26 May 2026 designations hit Rapira Group LLC, Aifory LLC, Arvix LLC, Bitpapa IC FZC LLC (peer-to-peer exchange, already sanctioned by the US Treasury in March 2024), and Virtual Asset Issuer — issuer of the USDKG gold-backed stablecoin from Kyrgyzstan — alongside individuals Sergey Mendeleev, Igor Gorin, Irina Akopyan, and Liran Cohen. The package also referenced Garantex, the Kremlin-linked exchange that rebranded as Grinex before halting operations after a $13 million hack in April 2026, as context for the sustained Western pressure campaign.
Compliance implications. Elliptic characterized the move as treating designated exchanges as functional equivalents of sanctioned banks — "a long-overdue alignment" that closes a gap exploited by bad actors for years. Global regulators are watching: applying traditional correspondent-banking prohibitions to on-chain activity sets a precedent that other jurisdictions are expected to study before drafting their own frameworks. UK firms should expect close scrutiny from OFSI on how they operationalize the new rules; guidance specifically addressing the cryptoasset context is expected to follow.
The FCDO's formal basis — "reasonable grounds to suspect" rather than proven conduct — leaves HTX room to contest the designation through UK legal channels. Whether the exchange pursues that route will be one of the next material developments in this case.
Sources: UK Foreign, Commonwealth & Development Office press release and sanctions list, 26 May 2026; Elliptic blog, 26 May 2026; CoinDesk, 27 May 2026.