Recent reports reveal that the United States and the United Kingdom are jointly reviewing cryptocurrency transactions totaling over $20 billion. These transactions are suspected to have flowed through a Russia-based virtual exchange, Garantex. 

The scrutiny comes as part of efforts to combat sanctions evasion, which is believed to be funding Vladimir Putin’s military actions in Ukraine.

Suspicious Transactions via Garantex

The investigated payments were processed through Garantex, a Moscow-based crypto exchange, using the dollar-pegged cryptocurrency Tether. These transactions occurred following the imposition of sanctions on Garantex by both the US and the UK due to suspicions of facilitating financial crimes and illicit transactions in Russia.

Despite comprehensive sanctions imposed on Russia, the West faces challenges in restricting the flow of funds into the country.

According to Bloomberg, Russia has established various mechanisms to circumvent sanctions, including offshore transactions, technology exchanges through intermediary countries, and encrypted digital currency transactions, posing difficulties for allied nations to effectively curb financial support for Putin’s regime.

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Biden Administration is Disrupting Crypto Transfer to Russia

Since the onset of the conflict, the Biden administration has been targeting crypto exchanges like Garantex to disrupt financial flows to Russia. 

The investigated $20 billion transactions represent a significant breach of sanctions against Russia, highlighting the ongoing struggle to enforce financial restrictions effectively.

Complexity of Cryptocurrency Transactions

While the inquiries into these transactions are ongoing, the complexity and opacity of cryptocurrency transactions present challenges in determining conclusive outcomes. There is no immediate implication of wrongdoing by Tether Holdings, the entity behind the dollar-backed stablecoin, which operates from the British Virgin Islands.

What Tether Says About the Issue

In response to inquiries, Tether Holdings emphasized its commitment to compliance and cooperation with law enforcement agencies. The company stated that it has frozen assets associated with entities on the US sanctions list and collaborates with authorities to combat illicit activities facilitated through its platform.

Garantex’s Silence

Garantex, the focal point of the investigation, has not provided any comments regarding the ongoing scrutiny. The US Treasury, as well as the UK’s Treasury and National Crime Agency, declined to offer official statements on the matter.

Garantex’s History

Established in Estonia in 2019, Garantex faced regulatory issues and eventually lost its license to operate in the country. Most of its operations are now centered in Moscow. The US Treasury has accused Garantex of facilitating illicit activities and disregarding anti-money laundering regulations.

Tether’s Role in Criminal Activity

While Tether facilitates seamless transactions and shelter from price volatility, its anonymity has attracted criminals. Cryptocurrency has been associated with investment scams and illicit transactions, raising concerns about its role in facilitating criminal activities.

As per CryptoNews, the U.S. Treasury Undersecretary for Counterterrorism and Financial Intelligence Brian Nelson highlighted that Russia aims to square off with Ukraine in a war. Additionally, Moscow is devising plans to evade US sanctions by relying on its alternative payment methods.

In other news, UK’s Financial Conduct Authority (FCA) is halting how “finfluencers” shaped the online platforms through misleading crypto memes.

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