An investigation is underway into billions of dollars in cryptocurrency transfers that were processed through a Russian exchange. The United States and Great Britain are leading the efforts to crack down on sanctions evasion in light of Russia’s involvement in the conflict in Ukraine. According to sources familiar with the matter, the transactions in question were funneled through Moscow-based exchange Garantex using the digital currency Tether, which is pegged to the US dollar.
These transfers occurred after Garantex was sanctioned by both the US and UK for potentially facilitating illegal activities and financial crimes in Russia. It is estimated that these transactions amount to over $20 billion, which would make it one of the largest breaches of sanctions against Russia since the start of the war.
However, there is no evidence of any wrongdoing on the part of Tether, which stated that they cooperate with law enforcement to ensure that all transactions are traceable and that any illegal activity can be tracked and stopped. In a 2023 interview with PYMNTS CEO Karen Webster, Kim Grauer from blockchain intelligence platform Chainalysis used Garantex as an example of a sanctioned company that continues to operate without concern in its jurisdiction.
Grauer noted that sanctions were the biggest category for illicit transactions in the previous year, even surpassing illegal activities like hacking and scams. She explained that the US Treasury Department’s Office of Foreign Assets Control (OFAC) has designated major international services as sanctioned entities, resulting in billions of dollars being tracked as illicit funds.
This news comes just days after the OFAC announced sanctions against 13 Russian FinTechs for using cryptocurrency to evade sanctions. According to Brian Nelson, the under secretary of the US Treasury for terrorism and financial intelligence, Russia is increasingly turning to alternative payment methods to fund its war against Ukraine.
In response, the Treasury will continue to expose and disrupt companies that assist sanctioned Russian financial institutions in reconnecting with the global financial system. This serves as a warning to other entities that may be tempted to help Russia circumvent sanctions.
