Russia’s Garantex $20B Crypto Inflow Under Probe By US and UK Authorities

The cumulative transfer of up to $20 billion in cryptocurrencies to a Garantex Exchange has suddenly piqued the interest of authorities in the United States and in the UK owing to its potential violations of Russian sanctions 

Garantex Caught In Between Russian Sanctions Evasion

Markedly, these authorities were privy to information about some crypto transactions to Russia-based virtual exchange Garantex that were transferred as part of a Russian sanction evasion. The $20 billion worth of transactions is one of the largest breaches of the sanctions imposed on Russia in 2022. 

Recall that Russia, under Vladimir Putin’s leadership, was sanctioned by some organizations and governments including the U.S., when it declared war against Ukraine.

In a bid to circumvent these sanctions, Russia allegedly turned to cryptocurrency even for receiving donations and terrorism support. Garantex is caught amid this violation of federal sanctions seeing that it was also on the list of Russia-related sanctioned entities. The U.S. and UK are now reviewing the illegal transactions. 

According to people familiar with the matter but requested to remain anonymous, the crypto exchange reportedly utilized U.S. dollar-pegged stablecoin Tether (USDT) for over $20 billion worth of transactions. The possible case against Garantex is enabling financial crimes and illegal transactions in Russia.

Governments Seek Russian’s Economic Collapse

Even though the U.S. government has recently flagged down additional Russian firms for using crypto to evade sanctions, the new investigation into Garantex suggests that the U.S. and UK are having trouble cutting off the flow of funds to Russia even after more than one year. 

Notably, it was believed that Putin and his cohort would end the war against Ukraine once they had financial and economic restrictions. Unfortunately, Russia devised several backdoor alternatives including offshore oil transfers, technology exchanges via third countries, and encrypted crypto transactions. 

Just like it did with FTX in 2022, Tether Holdings, the company behind the USDT stablecoin, stated that it has frozen all assets of entities with addresses found in the U.S. Treasury Department Office of Foreign Assets Control (OFAC) sanction list. 

“With Tether, every action is online, every transaction is traceable, every asset can be seized, and every criminal can be caught,” per a statement from Tether Holdings. “We work with law enforcement to do exactly that.”

So far, this measures have not proved effective in preventing the Russia sanction evasion.