Sanctioned Russian Crypto Exchange Garantex Seized, Operators Charged With Money Laundering
In a significant crackdown on illicit financial activities, the U.S. Department of Justice (DOJ) announced on Friday that it has seized the domains and servers of Garantex, a sanctioned Russian crypto exchange accused of facilitating money laundering for ransomware actors and darknet markets.
Garrantex was brought down in an international law enforcement operation involving agencies from the U.S., Germany, and Finland. The operation resulted in the freezing of nearly $28 million in cryptocurrency tied to Garantex, with assistance from stablecoin issuer Tether.
A History of Sanctions Evasion
Garrantex was sanctioned by the U.S. Treasury's Office of Foreign Asset Control (OFAC) in 2022, accusing the exchange of knowingly facilitating money laundering for ransomware actors, including Conti and Black Basta, and darknet markets like Hydra.
Despite these sanctions, Garantex continued to operate with relative impunity, processing over $60 billion in cryptocurrency transactions after being sanctioned. In total, the exchange has transacted over $96 billion, according to data from blockchain sleuthing firm Elliptic.
How Garantex Evaded Sanctions
Garrantex's ability to evade sanctions was largely due to its lax approach to know-your-customer (KYC) regulations. The exchange collected virtually no KYC information about its clients, allowing criminals to use its services unchecked.
Clients were registered to accounts using names like “Drug,” “hacker,” “taliban,” “Cashout, cleancoins” and “God.” This lack of oversight enabled Garantex's clientele to include notorious ransomware actors, darknet markets, and even North Korea's state-sanctioned hacking squad, the Lazarus Group.
International Cooperation
The seizure of Garantex's servers and domains was made possible through international cooperation between law enforcement agencies. The operation involved a coalition of U.S., German, and Finnish authorities working together to take down the exchange.
Tether, a stablecoin issuer, assisted in the freezing of nearly $28 million in cryptocurrency tied to Garantex. This move marked a significant development in the ongoing battle against illicit financial activities on crypto exchanges.
Operators Charged with Crimes
Following the seizure of Garantex's servers and domains, two of its operators have been criminally charged in the U.S. for their connections to the exchange.
Aleksej Besciokov, a 46-year-old Lithuanian national and Russian resident, has been charged with money laundering conspiracy, conspiracy to violate sanctions, and conspiracy to operate an unlicensed money transmitting business.
Aleksandr Mira Serda, a 40-year-old Russian citizen currently residing in the United Arab Emirates, has also been charged with money laundering conspiracy. These charges demonstrate the significant progress made in the ongoing efforts to combat illicit financial activities on crypto exchanges.
The Impact of This Operation
The seizure of Garantex and its operators marks a significant blow to those seeking to exploit crypto exchanges for illicit purposes. The operation serves as a reminder that law enforcement agencies are vigilant and determined to combat the use of cryptocurrency for nefarious activities.
As the crypto industry continues to evolve, it is essential that regulatory bodies and law enforcement agencies work together to address the ongoing challenges posed by illicit financial activities. The success of this operation demonstrates the importance of international cooperation in combating these threats.