A recent report by Bloomberg News revealed that the US and UK governments have initiated a joint investigation into crypto transactions exceeding $20 billion that are suspected of violating Russian sanctions. These transactions are believed to have been channeled through the Russia-based crypto exchange Garantex with the alleged intention of circumventing international sanctions and potentially funding military activities in Ukraine.
There has been a growing concern within the US government about the exploitation of cryptocurrencies to bypass sanctions. In a move to crack down on such illicit activities, the US recently imposed sanctions on crypto wallets associated with GAZA Now. Despite facing sanctions from both the US and UK for its alleged involvement in financial crimes and facilitating illicit transactions, Garantex reportedly processed significant amounts using Tether’s stablecoin USDT.
Despite the comprehensive sanctions imposed on Russia by Western nations, authorities have encountered difficulties in preventing financial inflows into the country. Russia has been employing various tactics to evade sanctions, including offshore transactions, tech exchanges through intermediary nations, and encrypted digital currency transactions. These tactics have complicated efforts to disrupt financial support for Putin’s regime.
The US Biden administration has ramped up its scrutiny of crypto exchanges like Garantex in an effort to disrupt Russia’s financial channels. The investigation into the $20 billion worth of transactions highlights the intricate nature of implementing financial sanctions effectively. While Tether Holdings has not been directly accused of misconduct, the company has reiterated its commitment to compliance standards and cooperation with law enforcement bodies.
Tether Limited has taken steps to freeze assets linked to entities on the US sanctions list, signaling its dedication to combating illicit financial activities. On the other hand, Garantex has chosen to remain silent in light of the ongoing investigation. Both the US Treasury and UK counterparts, including the Treasury and National Crime Agency, have refrained from commenting on the matter. Garantex, originally founded in Estonia in 2019, shifted its operations to Moscow due to regulatory hurdles and the revocation of its operating license. The exchange has previously been accused by the US Treasury of engaging in illegal activities and disregarding anti-money laundering protocols.