US Charges Garantex Admins with Money Laundering and Sanctions Violations

In a significant move, the United States Department of Justice (DOJ) has charged the administrators of the Russian cryptocurrency exchange, Garantex, with facilitating money laundering for criminal organizations and violating sanctions. The charges have been filed against Aleksej Besciokov, a 46-year-old Lithuanian national and Russian resident, and Aleksandr Mira Serda, a 40-year-old Russian national and United Arab Emirates resident.

Charges Against Garantex Admins

Besciokov, who served as the technical administrator of Garantex, is charged with money laundering conspiracy, which carries a maximum penalty of 20 years in prison. He is also accused of conspiracy to operate an unlicensed money-transmitting business, carrying a maximum penalty of five years in prison, and violating the International Emergency Economic Powers Act, with a maximum penalty of 20 years.

The Role of Garantex

Garantex, which was founded by Mira Serda, served as a cryptocurrency exchange that processed at least $96 billion in transactions since April 2019. The exchange was used to launder hundreds of millions of dollars in criminal proceeds and facilitate various crimes, including hacking, ransomware, drug trafficking, and terrorism.

Actions Taken by US Authorities

In response to the charges, US authorities have seized Garantex's domains (Garantex[.]org, Garantex[.]io, and Garantex[.]academy) and servers hosting its operations in a joint operation with law enforcement authorities from Germany and Finland. The US Justice Department has also obtained earlier copies of the servers, including accounting and customer databases, and frozen over $26 million in funds used to facilitate money laundering activities.

Tether's Blockage of Garantex

Following European Union sanctions targeting Garantex as part of its 16th package of sanctions against Russia, Tether blocked Garantex's digital wallets in the amount of more than 2.5 billion rubles. This led to Garantex suspending services, including the provision of cryptocurrency, temporarily while the team worked on solving the issue.

Previous Sanctions and Compliance Issues

Garantex was previously sanctioned by the Treasury Department's Office of Foreign Assets Control (OFAC) in April 2022 after over $100 million in Garantex transactions were linked to darknet markets and cybercrime actors. The exchange lost its license to provide virtual currency services in February 2022 following an investigation by Estonia's Financial Intelligence Unit, which found critical compliance issues with Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) policies.

Consequences of Non-Compliance

Despite losing its Estonian license to provide virtual currency services, Garantex continued to operate through unscrupulous means. The US sanctions have brought significant pressure on the exchange, with authorities freezing funds and seizing servers in an effort to disrupt its illicit activities.

Investigation Continues

The investigation into Garantex's involvement in money laundering and sanctions violations is ongoing. As the case unfolds, it is likely that more charges will be filed against individuals and entities associated with the exchange. The US Department of Justice has demonstrated its commitment to combating financial crimes and holding those responsible accountable for their actions.

Impact on Cryptocurrency Market

The recent developments surrounding Garantex have significant implications for the cryptocurrency market, particularly in regards to anti-money laundering (AML) regulations. As regulators continue to crack down on unscrupulous exchanges and operators, it is likely that more stringent AML policies will be implemented across the industry.

Conclusion

The charges against Garantex admins are a significant blow to Russia's cryptocurrency exchange, which has been under scrutiny for its alleged involvement in money laundering and sanctions violations. As the investigation continues, it is essential to monitor developments in this case and their potential impact on the broader cryptocurrency market.