US, UK Probe $20B Crypto Transfers to Sanctioned Russian Exchange Garantex

The U.S. and U.K. are investigating over $20 billion in cryptocurrency transfers to sanctioned Russian exchange Garantex using Tether's USDT-USD stablecoin. The probe aims to curb sanctions evasion supporting Russia's actions in Ukraine. Garantex has been scrutinized for alleged financial crimes and illicit transactions, prompting its sanctions by Western nations. Ongoing inquiries indicate the focus on transfers since the sanctions were imposed, with no direct accusations against Tether Holdings.

US, UK Probe $20 Billion Cryptocurrency Transfers to Sanctioned Russian Exchange Garantex

Washington, D.C./London - The United States and United Kingdom are jointly investigating the transfer of over $20 billion worth of cryptocurrency to Garantex, a sanctioned Moscow-based virtual currency exchange, according to a report published Thursday. The inquiry focuses on transactions involving dollar-pegged stablecoin Tether (USDT-USD).

The investigation forms part of coordinated efforts by Western allies to crack down on sanctions evasion in the wake of Russia's invasion of Ukraine. Garantex was sanctioned by both the US and UK due to allegations it facilitated "illicit activities" and financial crimes in Russia, including money laundering and the support of cybercrime.

According to sources cited by Bloomberg News, the transfers in question have continued since Garantex's designation as a sanctioned entity. The inquiry is ongoing, and there is currently no evidence of wrongdoing by Tether Holdings, the company behind USDT-USD.

The investigation underscores the growing use of cryptocurrency for illicit activities, particularly in the face of international sanctions. Governments worldwide are grappling with the challenge of regulating the digital asset sector while preserving its potential for innovation and legitimate economic activity.

The US Department of Justice has established a task force dedicated to investigating potential sanctions breaches involving cryptocurrency, while the UK's Financial Conduct Authority (FCA) has warned firms against providing financial services to sanctioned Russian entities.

The scrutiny of Garantex's activities also raises concerns about the potential complicity of stablecoins in facilitating illicit transactions. Stablecoins are designed to maintain a stable value pegged to traditional currencies like the US dollar. This feature makes them an attractive option for actors seeking to avoid the volatility of decentralized cryptocurrencies like Bitcoin.

The ongoing investigation into Garantex and USDT-USD transactions highlights the need for continued vigilance by law enforcement and regulatory authorities in the face of evolving methods of sanctions evasion. The findings of the inquiry are likely to have implications for the broader cryptocurrency industry and the ongoing efforts to combat financial crime.