The United States Department of Justice (DOJ) and the German and Finnish law enforcement agencies have seized about $26 million from Garantex, a cryptocurrency exchange based in Russia. Following the crypto conflicts and sanctions imposed on the exchange’s host country, the European Union (EU) also sanctioned Garantex as it is linked to many already-sanctioned Russian banks.
Prior to court action on the exchange, famous stablecoin issuer Tether seized about $27 million from Garantex, prompting the exchange to pause its services on Thursday.
Charged for Money Laundering
Garantex has been in operation since 2019 and has processed crypto transactions worth almost $100 billion, gaining the trust of thousands of crypto users. However, the DOJ and other agencies have noted that the exchange allegedly facilitated money laundering by transactional criminal and terrorist organizations.
“Garantex received hundreds of millions in criminal proceeds and was used to facilitate various crimes, including hacking, ransomware, terrorism, and drug trafficking, often with substantial impact to U.S. victims,” the DOJ noted.
Meanwhile, amid the public knowledge of sanctions on Russia and Garantex, Aleksej Besciokov and Aleksandr Mira Serda, the exchange execs, conspired to rebrand Garantex operations to attract more U.S.-based customers, thus violating and evading the sanctions.
Above all, the exchange did not register with the Financial Crimes Enforcement Network (FinCEN) despite running as a money transmitter.
Legal Action
Following the court order, law enforcement agencies seized three domains linked to Garantex: Garantex.org, Garantex.io, and Garantex.academy. As a result, the sites can no longer be used for additional vices, and users visiting the sites will get a prompt indicating their current seizure status.
United States law enforcement agencies also froze over $26 million in funds used to promote the exchange’s money laundering acts.
Besciokov and Mira Serda are expected to serve at least 20 years behind bars. They are both charged with one count of conspiracy to commit money laundering. Additionally, Besciokov is charged with one count of conspiracy to violate the International Emergency Economic Powers Act and with conspiracy to operate an unlicensed money-transmitting business.
Meanwhile, German governmental agencies recently shut down over 45 crypto exchanges for involvement in and facilitation of money laundering activities.
