The European Union targets Russia’s largest approved crypto exchange, but analysts point out that it has been operating well under sanctions for years.
On Monday, February 24, the Council of Europe introduced the 16th sanctions package and added the Russian cryptocurrency exchange Garantex to its list because it was “closely linked to EU-sanctioned Russian banks.”
Garantex appears to be one of the largest Russian-based crypto exchanges operating within the Kremlin view. The exchange has offices in a high-rise building in the federal tower in Moscow, offering cash rubles deposits and withdrawals to Russian bank cards, including Sberbank, Tinkoff and Alfa-Bank. .
Council of Europe sanctions against Garantex come two years after the exchange was blacklisted by the US Treasury Department’s Foreign Assets Control Office in 2022.
“It’s not a major impact.”
It was co-founded in late 2019 by Russian technical expert Stanislav Drugalev and former KGB executive Sergey Mendeleev.
For each data from US-based blockchain intelligence company Chain Orisis, the exchange will promote payments related to ransomware gangs and darknet markets, including the infamous Hydra Marketplace, which closed in April 2022. It was helpful. organizations and terrorist groups including Hezbollah.
Speaking to Crypto.News, Andrew Fierman, National Security Information Chain Dialysis Director, noted that Garantex remains “a few years after it was approved by the US and the UK.”
“The EU movement will not have a significant impact on the overall operation of Garantex, while increasing the sanctions requirements for EU entities. However, it will not result in economic pressure on Russian financial services and the current cryptocurrency exchange. It symbolizes the EU’s efforts to maintain it.”
Fierman points out that Trust “plays an important role in the Russian cryptocurrency ecosystem.” He also added that despite the latest sanctions, Garantex continues to have “the largest possible portion.”
“Garantex is generally a reliable platform within Russia and has stable liquid reserves, making it rare for users to leave the platform. As we saw with other Russian exchanges, we stopped retreating. Instead, they were defeated by Russian law enforcement agencies, or organizations influenced by international law enforcement efforts such as German BKA dismantling 47 small scales, Later they provided customers chocolate., On the No-kyc platform, users may flock to the most secure services.”
Garantex’s reliability is linked not only to its long-standing presence in Russia, but also to its apparent support from the Kremlin. A March 2024 investigation by Eesti Ekspress and an international consortium of investigative journalists revealed links between Garantex affiliates and the Russian government. The report found that one of the exchange’s co-founders died under mysterious circumstances and soon another shareholder with Rosneft, a Kremlin-controlled oil giant, managed the company’s records I did.
US-based digital forensics analyst Richard Sanders noted that the Russian government is likely to have a favorable interest in allowing Garantex to operate.
“The intelligence value that the Russian government can gain is far outweighed their desire to prosecute large profits, from what the government considers to be an unfriendly nation. Garantex has a top client There are dark (net) markets and ransomware groups as well.”
Garantex defends its business, and the investigation claims it is actively working to prevent illegal activities and work with international law enforcement agencies. However, US financial sanctions starting in April 2022 highlighted the role of exchanges in promoting illegal transactions.
Garantex, like informal remittance networks, often referred to as the “Hawala” system, which avoids regulations and traditional financial surveillance, according to George Volsin, a financial crime analyst for the Association of Certified Money Laundering Specialists. is operated by.
Despite being approved by the US in 2022, Isabella Chase, UK and EU policy director for blockchain forensics firm TRM Labs, said, “It handles billions of dollars of transactions each year, with cybercriminals and constraints. “We are permitted to wash the presence of the ”, he told crypto.news in an explanatory statement. Illegal funds with minimal surveillance. ”
According to TRM Labs data, Garantex and Iranian Crypto Exchange Nobitex account for more than 85% of influx into authorized entities and jurisdictions.
“EU sanctions on Garantex aim to further limit our ability to operate internationally and increase the difficulty of washing illegal funds. However, enforcement is important. There is no strong international cooperation. If so, cybercriminals could migrate their activities to alternative, non-compliant exchanges or decentralized platforms. Garantex is not the only option for bad actors.”
Isabella Chase
TRM Labs has identified the exchange as a major facilitator, but other underground banking networks, peer-to-peer platforms and decentralized finance services also continue to be “alternatives for criminals seeking to move funds.” ” said TRM Labs.
Despite efforts that appear to be working with law enforcement, Galantex’s deep relationship with Russian government and questionable actors has raised concerns, with analysts saying that ongoing operations under the Kremlin surveillance It warns that it will threaten international security and the global crypto market.
