The investigation focused on virtual exchange Garantex, and the news was reported initially by Bloomberg and cited by Reuters. The investigation is part of collaborative efforts aimed at curbing sanctions evasion allegedly supporting Vladimir Putin's military campaign in Ukraine.
The scrutinised payments were routed through the Moscow-based crypto exchange, Garantex, using the dollar-pegged cryptocurrency, Tether, sources revealed on the condition of anonymity due to the matter not being publicly disclosed yet. These transactions occurred after Garantex's sanctioning by the US and UK over suspicions of facilitating financial crimes and illicit transactions in Russia.
The inquiry underscores the ongoing challenges faced by Western nations in effectively stemming the flow of funds into Russia, despite the implementation of extensive sanctions following Putin's invasion of Ukraine in February 2022. Efforts to tighten regulations on crypto exchanges such as Garantex have been underway since the outset of the conflict. If confirmed, the USD 20 billion in transactions would mark one of the largest breaches of sanctions against Russia since their imposition. However, sources caution that the investigations are ongoing, and definitive conclusions remain elusive due to the intricate and opaque nature of cryptocurrency transactions.
It's worth pointing out that there are no immediate indications of misconduct by Tether Holdings, registered in the British Virgin Islands. Tether Holdings responded to inquiries regarding the US-UK investigation, asserting that it has frozen assets associated with entities on the US sanctions list and collaborates with law enforcement agencies to combat illicit activities.
Garantex, the Moscow-based exchange under scrutiny, has not provided comment on the matter. Both the US Treasury and UK authorities declined to comment on the ongoing investigation.
Established in Estonia in 2019, Garantex saw its license revoked by Estonia in February 2022, with operations reportedly relocated to Moscow's Federation Tower. The US Treasury accused Garantex of permitting its systems to be utilized by illicit actors, leading to its sanctioning in April 2022. Garantex transactions have been linked to over USD 100 million in illicit activities, including those involving the Russia-based ransomware group Conti.
Garantex's website indicates support for withdrawals via Russian banks Sberbank of Russia PJSC, Tinkoff Bank JSC, and Alfa-Bank AO, all of which have been sanctioned by the US and some allies. Recent reports also suggest Garantex's involvement in advising on using crypto to access US dollars through intermediary networks.
In a demonstration of ongoing scrutiny, the US Treasury added peer-to-peer virtual currency exchange Bitpapa to its list of sanctioned entities, citing connections to Garantex.
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