Introduction

Collaborating on March 28, the US and UK governments have initiated a joint inquiry into cryptocurrency transactions exceeding $20 billion, allegedly executed to circumvent Russian sanctions, as reported by Bloomberg News.

It is believed that these transactions, intricately channeled via the Russian crypto exchange Garantex, may be part of efforts to avoid international sanctions and might be utilized to support military operations in Ukraine.

The escalation of United States’ enforcement actions against crypto-enabled sanction evasion has recently led to the targeting of crypto wallets associated with GAZA Now, underscoring a broader crackdown on illicit financial activities.

In spite of the stringent sanctions in place against Russia, regulating financial flows into the country has posed significant challenges for Western powers. Russia is known to employ a range of tactics, including offshore transactions and encrypted digital currency dealings, to sidestep sanctions, complicating attempts to sever financial ties funding President Putin’s administration.

With a targeted approach towards exchanges such as Garantex, the Biden administration emphasizes disrupting Russia’s financial networks. The substantial $20 billion figure under investigation showcases the multifaceted battle being waged to effectively enforce financial sanctions.

While Tether Holdings has not been directly implicated in any wrongdoing amidst the ongoing probe, Tether Limited has assured its commitment to regulatory compliance measures and has cooperated with law enforcement efforts. The company has frozen assets tied to individuals on the US sanctions list, demonstrating its dedication to combating illicit financial practices.

Garantex, the focal point of the inquiry, has chosen to remain silent regarding the investigation. Authorities from the US Treasury and UK, including the Treasury and National Crime Agency, have refrained from offering detailed comments on the proceedings.

Established in Estonia in 2019 with subsequent relocation to Moscow due to regulatory obstacles, Garantex has faced previous allegations from the US Treasury concerning its involvement in unlawful activities and neglect of anti-money laundering guidelines.