Sanctioned crypto exchange Garantex has halted operations following Tether's decision to freeze $27 million worth of USDT on the platform.

In a March 6 announcement on Telegram, the exchange confirmed a temporary suspension of crypto trading and withdrawals, citing Tether's decision to freeze its funds.

Sanctioned crypto exchange Garantex has reportedly halted operations following a decision by Tether to freeze $27 million worth of USDT on the platform.

In a March 6 announcement on Telegram, the exchange announced a temporary suspension of crypto trading and withdrawals, explaining that the move follows Tether’s decision to freeze its funds and an inability to use the stablecoin.

“Tether has entered the war against the Russian crypto market and blocked our wallets, the total amount of which is more than 2.5 billion rubles. We are announcing the temporary suspension of all services, including cryptocurrency withdrawal, while our entire team solves this problem,” the firm said.

Garantex warned that this action could set a precedent, putting all Russian USDT holdings at risk. The exchange also said it plans to challenge the decision, adding that while it may be the first exchange affected, it likely will not be the last.

Meanwhile, Tether is yet to provide an official response or explanation for the move.

The firm did not immediately respond to CryptoSlate’s request for comment.

Tether is the issuer of USDT, the largest stablecoin with a market capitalization of more than $140 billion.

Garantex sanctions

The latest development comes amid mounting sanctions against Garantex over allegations that it helped Russia circumvent Western financial restrictions.

The US Treasury’s Office of Foreign Assets Control (OFAC) first sanctioned the exchange in April 2022 as part of efforts to combat illicit financial activities.

More recently, the European Union also imposed sanctions on Garantex, stating that the exchange has ties to Russian banks already subject to EU restrictions. This marked the first time the EU had directly sanctioned a Russian crypto exchange.

The move followed reports that U.S. and British authorities are investigating Garantex for allegedly facilitating over $20 billion in transactions to evade sanctions. Regulators suspect the platform played a role in Russia’s efforts to move funds, which could have contributed to its war-related financial strategies.