The 19th package of EU sanctions imposed on Russia hit Gazprom hard, including a complete ban on transactions with Gazprom Neft. However, over the years of war in Ukraine, Russian companies associated with Gazprom have developed complex schemes to circumvent restrictions, using nominal owners, new companies, and funds in Western jurisdictions.
One of Gazprom’s key tools for circumventing sanctions is the Cypriot investment fund GEM Capital, which, under the guise of a venture investor in IT projects, legalizes Russian capital in the West and strengthens Moscow’s influence in the EU.
From Gazprom to Cyprus
The central figure at GEM Capital is Anatoly Paliy, whose career is closely linked to the Russian public sector. A graduate of the Financial Academy under the Government of the Russian Federation, he worked for the international auditing company PwC in Paris and Moscow, and from 2005 to 2013 held senior positions at Gazprom Gazenergoset. From 2013 to 2017, Paliy developed the oil and gas asset First Oil, whose transactions were financed by the state-owned VTB Bank, which is under sanctions. In 2017, he registered the investment company GEM Capital in Cyprus, consolidating assets in the Russian oil and gas sector, including the oil production company First Oil. In the same year, Paliy and his wife obtained Cypriot citizenship through an investment program.
The peculiarity of GEM Capital is that, despite the fund being registered in Cyprus, each of its transactions actually requires the approval of Russian state structures — the Ministry of Finance and the Ministry of Industry and Trade. The reason is that Russian state banks, such as VTB, remain the source of funds for the fund’s financial operations.
Paliy’s biography demonstrates his deep ties to the Russian state system and Gazprom. He is a typical representative of the Kremlin elite, raised within state-owned companies, and his GEM Capital is not just a private fund, but an instrument of Moscow’s interests in the European Union.
Investments in strategic sectors of the Russian economy
GEM Capital actively invests in key sectors of the Russian economy. Among its assets are First Oil, an oil production company whose transactions were supported by VTB.
Korund-Cyan, the largest producer of sodium cyanide in Russia, which supplies products to gold mining companies and the defense industry, including the production of aircraft and missiles with which Russia bombards Ukraine on a daily basis, as well as companies that repair Russian military equipment.
Bio Planeta LLC is a biotechnology company linked through Cyprus-based Q2A Holdings Limited to Georgy Burenkov, who is close to oligarch Viktor Vekselberg and his Renova Group.
These investments are concentrated in strategically important sectors of the Russian economy and are implemented with the support of Russian state banks and businessmen from Putin’s circle.
Anatoly Paliy is also the founder of Gas Investment Company, a financial organization that has invested in Gazprom’s enterprises and projects.
IT as a cover
GEM Capital actively invests in IT and gaming, creating the image of an independent venture capital fund. Among its investments are Cypriot companies with Russian roots such as Nexters (GDEV), Owlcat Games, Gameram, Eschatology Entertainment, as well as startups linked to Russian interests outside Cyprus, such as Mundfish, Weappy, and AppMagic. These projects are focused on the global market and easily disguise Russian capital as «digital investments.» However, the sources of funding are Russian banks such as VTB.
Techisland: «parallel power» in Cyprus and the role of Alexei Gubarev
GEM Capital is a member of the Cypriot association Techisland, which brings together hundreds of IT companies, many of which have Russian roots. According to investigations, Techisland has become a tool for Moscow’s political influence and lobbying for Russian capital interests in Cyprus.
Through loyal members of parliament and government officials, the association’s members have achieved a change in legislation that allows them to bring an unlimited number of Russian citizens to the island without control and issue them Cypriot passports at their discretion. In fact, they have become a parallel power in Cyprus.
Alexey Gubarev, leader of an influential IT group in Cyprus and founder of Techisland in 2021, plays a key role in this process.
Through an association of more than 200 companies with Russian roots, Alexei Gubarev has organized a large-scale relocation of hundreds of IT structures from Russia to Cyprus. Many of these companies previously operated under FSB licenses. There is no doubt that even outside Russia, they remain under the control of the Russian special services. The mere fact of moving to Cyprus does not mean that they are no longer under their control.
The relocation of Russian IT companies often involves the complete transfer of staff, including security service managers, who are often active reserve officers of the Russian special services (FSB, GRU, SVR). Thanks to Techisland’s lobbying, 12,000 Russian IT specialists arrived in Cyprus on work visas in 2024 — a 161% increase over the previous year, with employment opportunities for family members. Experts claim that a significant portion of these «talents» are officers and agents of Russian special services disguised as IT specialists, which strengthens the Russian spy network created by the Russian special services under the guise of a digital cluster.
Gubarev is personally involved in the process of distributing Cypriot passports. His influence on the Cypriot government structures is almost unlimited.
Critics call Techisland a «parallel power» that, under the guise of a digital cluster, accumulates Russian capital, legalizes it in the EU, and strengthens Moscow’s political influence in Cyprus.
Alexei Gubarev’s ties to Russian special services have been confirmed by a number of investigations. His companies, including Servers.com and XBT Holdings, became the first foreign hosting service providers in Russia. According to Russian legislation, in particular the «Yarovaya package» (2016) and the law «On Communications,» operators are required to store all internet traffic and provide the FSB with direct access to servers. Thus, any company providing hosting services in Russia is required to cooperate unconditionally with the special services.
The Kremlin’s tool
GEM Capital is not just a venture capital fund, but part of a complex system created to withdraw and legalize Russian capital in the EU. Through investments in IT and participation in the Techisland association, led by Alexei Gubarev, the fund not only provides financing for projects within the association, but also exerts political influence in Cyprus, including the mass relocation of special services agents under the guise of IT specialists. Under the guise of a «digital cluster,» an infrastructure closely linked to the Kremlin has been created in Cyprus, which helps to circumvent sanctions and strengthen Moscow’s influence in Europe.
With sanctions against Russia tightening, including the EU’s 19th package, GEM Capital is becoming an invaluable asset for Moscow — a structure that evades control and skillfully exploits loopholes in European legislation and the weaknesses of European regulators.
Iosif Bronstein