U.S. Sanctions Aren’t Touching Russia’s Hottest Startup

Summary

WSJ What’s News — U.S. Sanctions Aren’t Touching Russia’s Hottest Startup

Date: August 10, 2026
Host: Luke Vargas (B)
Featured Guest: Alex Frangos, Journal finance editor (C)

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Episode Overview

This episode explores how U.S. sanctions packages aimed at Russia have failed to touch one of the country's fastest-growing startups: A7, a state-backed payments network specifically designed to evade Western sanctions. The conversation breaks down how A7 has grown into a $100 billion operation, the sophisticated tactics it uses to circumvent sanctions—including crypto and shell companies—and what its rise means for the future of international finance and the dwindling dominance of the U.S. dollar.

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Key Discussion Points & Insights

Middle East Tensions & Global Markets

• Iranian officials raise "unrealistic demands" in negotiations to reopen the Strait of Hormuz, including ending all sanctions and payment of reparations [01:00–02:13].
• Israeli PM rejects U.S. Gaza peace plan; U.S.-brokered ceasefire leaves major questions unresolved.
• Meta is set to release open-weight AI models to compete with cheaper Chinese alternatives and will invest $1 billion in data center host communities [04:00–05:02].
• Apple tests Chinese memory chips due to a global chip crunch but faces regulatory hurdles from the White House [05:02–05:49].
• UAE ramps up oil and gas investment post-OPEC, and Berkshire Hathaway shifts strategy under its new CEO Greg Abel.

Deep Dive — Russia’s A7: The Sanctions-Evading Payments Network [08:06–12:13]

What is A7 and How Does it Work?

• Alex Frangos: "It's basically replacing the role that a bank or a payments company like PayPal or Western Union might fulfill in terms of helping people move money across borders." [08:19]
• Sanctions after Russia’s Ukraine invasion cut Russian banks off from systems like SWIFT.
• Even unsanctioned banks stopped handling Russia-related transactions due to reputational and compliance risk.

The Cat-and-Mouse of Sanctions Evasion

• Frangos: "There's been a real cat and mouse chase since 2022... This is kind of the latest and most sophisticated version of that." [09:24]
• A7 leverages:
  • Cryptocurrency: Russians pay in rubles, get credited in crypto, transact internationally without touching USD/EUR systems.
  • Shell Companies: Often in nearby countries like Kyrgyzstan, facilitating disguised transactions—sometimes using AI tools to forge invoices for sensitive items like drone parts.

Scale and Global Ambition

• Frangos: "A7 is gotten so huge, it claims it's handling a fifth of payments for Russian trade. It's like $100 billion." [10:59]
• The company is now advertising openly, seeking to set up subsidiaries in Africa and offering its services to other sanctions-hit nations: "Saying, hey, we're here, we're here to help." [10:59]

Western Limitations & Dollar Dominance

• Host (Vargas): "I can’t imagine Washington [...] very happy about its success, especially if it’s emerging as a replicable model..." [11:22]
• Frangos: "They've already sanctioned A7, noticing very quickly what it's doing, but there's only so much they can do. [...] This is a real sign that the more the US uses its supremacy in international finance [...] when countries get cut off, they find ways around, and this is a classic example of that." [11:31]
• Warning: The spread of alternatives like A7 erodes US dollar power and the global financial order.

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Notable Quotes & Memorable Moments

• On A7’s impact:
  "A7 claims it's handling a fifth of payments for Russian trade. It's like $100 billion."
  — Alex Frangos [10:59]

• On circumventing Western control:
  "The transaction doesn’t touch the US dollar banking system or the euro banking system, where the ECB or European officials might have purview over and could see that transaction, try to block it."
  — Alex Frangos [09:24]

• On policy implications:
  "This is a real sign that the more the US uses its supremacy in international finance [...] when countries get cut off, they find ways around, and this is a classic example."
  — Alex Frangos [11:31]

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Timestamps for Key Segments

• Middle East tensions, Iran & Gaza Peace Plan — 01:00–02:47
• Meta’s Open AI & Apple’s Chip Dilemma — 04:00–05:49
• Berkshire Hathaway’s Shift & Market Updates — 05:49–07:53
• Russia’s A7 Sanctions-Evasion Network Explained — 08:06–12:13

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Summary

This episode reveals how, despite ever-tighter U.S. sanctions, Russia’s state-backed payments startup A7 has grown explosively, largely by leveraging cryptocurrencies, shell companies, and savvy technical solutions to operate outside of U.S. and European financial oversight. Now facilitating about 20% of Russia's foreign trade and positioning itself to serve other sanctioned countries, A7 not only blunts the impact of Western sanctions, but—by demonstrating that large-scale alternatives to the dollar-led system are feasible—raises big questions about the future of global finance and the reach of American economic power.

Transcript

[A]

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[B]

Iran dials up its demands to reopen the Strait of Hormuz Plus Meta embraces open weight AI models in a bid to blunt the appeal of cheaper Chinese competition. And we'll look at Russia's hottest startup, a government backed sanctions evasion network.

[C]

And it's trying to set up subsidiaries and telling other countries that may have problems accessing the international banking system because U.S. or European officials have sanctions them or cut them off, saying hey, we're here, we're here to help.

[B]

It's Monday, August 10th. I'm Luke Vargas for the Wall Street Journal, and here is the AM edition of what's news, the top headlines and business stories moving your world today. Israeli Prime Minister Benjamin Netanyahu is formally rejecting President Trump's Gaza peace plan, as we discussed on Friday's show. That comes after Netanyahu had made it clear that Israel hadn't agreed to the plan and had responded to the White House with comments. The proposal, which would see Hamas hand over its weapons in exchange for Israel withdrawing from Gaza, is meant to build on a ceasefire agreed to last October, which left many challenging questions about the territory's future unresolved. Meanwhile, a top Iranian official has upped the ante in negotiations to open the Strait of Hormuz, issuing a lengthy slate of demands for the US including the ending of all sanctions, the payment of reparations and a cessation of attacks against Iran's militia allies. Journal Middle east correspondent Benofouqan said those demands don't necessarily constitute Iran's formal position in talks, but the high hurdles to a potential deal are making it harder for President Trump to find an off ramp from the conflict.

[D]

Obviously that's a strategy for Iran to come up with unrealistic demands, hoping that they'd get something in the middle. But that really shows there's a big wide space between the moment they even agree on transit and the moment they fully reopen the Strait of Arrival. So kind of an early agreement on the transit arrangements is possible. There's a lot of opposition from the igc, the Revolutionary Guard to finalize it, but that's the real possibility an agreement to reopen fully reopen almost to traffic. That's really some time away. That's going to take a lot of negotiation.

[B]

Earlier this month, President Trump called off a wave of US Attacks aimed at breaking a deadlock in talks, citing progress in negotiations. However, mediators say the progress has stalled in in recent days and produce supplier Taylor Farms is recalling a range of products from grocery shelves after concerns they could be contaminated with salmonella. The recalled guacamoles and salsas contain jalapeno peppers that are tied to an earlier recall by Coast Citrus distributors. Taylor said it wasn't aware of any reported illnesses linked to its products containing jalapenos, while Grub Market, the owner of Coast Citrus, didn't immediately respond to a request for comment. The latest recall comes a month after federal agencies linked Taylor supplied lettuce to thousands of cyclospirasis illnesses across multiple states in a bid to address rising public frustration over the data center buildout and investor concerns. Meta's Mark Zuckerberg says that the company plans to release more open weight AI models and funnel a billion dollars to communities hosting its data centers. In a lengthy essay, Zuckerberg criticized Meta's competitors for building AI for companies, governments and other institutions, and said Meta would instead focus on putting power in people's hands. To do so, the company plans to launch a new AI model called Muse Glimmer in the coming weeks, featuring open weights letting users download the numerical values that determine its behavior and to fine tune it for their own applications. While the US Initially led the development of open weight models, China has quickly caught up and companies have begun turning to its models, which are often much cheaper than closed proprietary models developed in Silicon Valley. Apple is trying to alleviate the AI memory chip crunch that's led it to raise prices on its devices globally. And in doing so, it's turning to China. We report that Apple has been testing memory chips from China's CXMT across product lines, including iPhones and MacBooks. But as Journal Asia business editor Peter Landers explains, it needs to win the White House's blessing if it wants to do business with a Chinese company.

[E]

There is a risk that it could draw the ire of President Trump or members of Congress from both parties. Republicans and Democrats have expressed concern about US Companies doing business in China in general, especially a sensitive high tech area like chips, and so there are certain guidelines that Apple has to work under. Apple is not supposed to share its technology specs with the Chinese company cxmt, but they can discuss possibly using chips off the shelf. So I think what Apple would ultimately want would be for President Trump to say, this is fine. There's a membership shortage. It's affecting prices for Americans because Americans are paying more for smartphones, for PCs and a lot of other electronic items.

[B]

The United Arab Emirates is continuing to ramp up oil production in a bid to establish itself as an energy superpower, given that natural gas is typically extracted along with oil. Adnoc Gas is investing over $8 billion in a new processing unit at the UAE's largest gas plant, along with building a new gas export facility. It comes after the UAE's exit from OPEC, meaning it's now free of the oil cartel's quota restrictions. And Berkshire Hathaway's new CEO, Greg Abel is starting to put his stamp on the conglomerate buying more stocks than it sold for the first time in more than three. Able took over from Warren Buffett in January and has since overseen Berkshire's purchase of homebuilder Taylor Morrison home and its $10 billion investment in Alphabet shares, which ranked among the biggest deals the conglomerate has pursued in recent years. Coming up, U.S. lawmakers pass a punishing new sanctions package against Moscow, but it won't cover a startup handling some 20% of payments in Russia's foreign trade. We'll take a look at A seven after the break. What's driving the markets this week? What's on investors minds as they look ahead? Find out on the Markets podcast from Goldman Sachs a breakdown of market moves and macro signals in 10 minutes or less. The Markets podcast from Goldman Sachs. Listen now. The U.S. senate on Friday passed a punishing sanctions package negotiated by the late Lindsey Graham in a bid to deprive Russia of revenue from its exports. But that package doesn't encompass Russia's A7, a state backed payments network built to evade sanctions. The Journal's Alexander Osipovich reports that A7 has quickly grown to handle more than $100 billion annual payments and is even now eyeing an overseas expansion. But since Alex is on vacation this week, his editor Alex Frangos is here to unpack what A7's success can tell us about Western efforts to constrain Russia's economy. Alex, just start off by explaining what a 7 does here because reading about it, it does seem to handle a number of distinct financial functions.

[C]

Yeah, it's basically replacing the role that a bank or a payments company like a PayPal or Western Union might fulfill in terms of helping people move money across borders. So if you're a company and you're importing something from Another country, you got to get money from A to B, and usually it's your bank or some sort of payments provider, and they exchange the currency and they make sure that the money goes from here to there. The problem for Russia is that the sanctions that the west imposed on them after invading Ukraine basically cut them off from the international banking system.

[B]

Is that Swift?

[C]

Yeah, Swift is a messaging service that's used to facilitate those transactions. So that was the big kahuna. But there was all sorts of other sanctions, and even banks that theoretically might be able to do this kind of transaction without violating a sanctions law said, you know what, we don't have anything to do with this.

[B]

And so here comes a 7 sort of helping to facilitate these payments and is able to sort of process money or cash equivalents of all sorts, including crypto.

[C]

Notably, there's been a real cat and mouse chase since 2022, since the sanctions were imposed, where Russia has set up different systems to try to get money in and out. This is kind of the latest and most sophisticated version of that. And they use different systems. Sometimes they're using cryptocurrency. So you're a Russian and you want to pay somebody in China, you bring some rubles in, they credit you with some cryptocurrency, they help do the transaction. So the person on the other end gets paid either in cryptocurrency or in yuan. But either way, the transaction doesn't touch the US dollar banking system or the euro banking system, where the ECB or European officials might have purview over and could see that transaction, try to block it. So they're using crypto in that way, but they're also using shell companies in countries near Russia, like Kyrgyzstan, where you would set up a company, seems like an innocuous kind of importer exporter, and you funnel transactions through that. And in one of the cases, one of these companies was creating fake invoices using AI tools, basically saying, oh, we're just importing this, and actually we're importing drone parts. So the kind of thing that might catch the eye of law enforcement, you know, international monitoring in the Western banking system.

[B]

Got a pretty sophisticated savvy operation here. And yet I guess all the more impressive that it's a company that's founded less than two years ago and which is now eyeing an expansion, sort of. After being a bit behind the scenes initially, it's stepping out into the spotlight, advertising its services to Russian citizens, to small businesses, and even opening offices abroad.

[C]

Yeah, A seven is gotten so huge, it claims it's handling a fifth of payments for Russian trade. It's like $100 billion. And it's trying to set up subsidiaries in countries in Africa and telling countries that may have problems accessing the international banking system because U.S. or European officials have sanctioned them or cut them off, saying, hey, we're here, we're here to help.

[B]

I can't imagine Washington and others are very happy about its success, especially if it's emerging as a replicable model that other countries could turn to.

[C]

Yeah, They've already sanctioned a 7, noticing very quickly what it's doing, but there's only so much they can do. And this is a real sign that the more the US uses its supremacy and international finance through the US dollar and says, hey, we're going to cut this country off or cut that country off, that's a very powerful thing. When they did that in 2022, it shook the Russian economy. But when countries get cut off, they find ways around, and this is a classic example of that. And it's gotten bigger and more sophisticated. And so it's eroding the influence of the US dollar in a way when you set up this other system to run parallel.

[B]

Journal finance editor Alex Frangos, thanks for breaking this all down for us.

[C]

Thank you, Luke.

[B]

And we've left a link to Alexander Osipovich's reporting in our show Notes. And that's it for what's news for this Monday morning. Today's show was produced by Daniel Bach. Our supervising producer is Sandra Kilhoff. And I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show.

[C]

Until then, thanks for listening.

[A]

This podcast is brought to you by Mass Mutual. For 175 years, MassMutual has stood for strength and stability, helping people secure their future and protect the ones they love. Learn more at massmutual. Com. That's massmutual.

[E]

Com.