Authorities are reportedly investigating billions in cryptocurrency transfers that moved through a Russia-based exchange.
The probe into the $20 billion-plus payments is part of efforts by the U.S. and Great Britain to crack down on sanctions evasions amid Russia’s war in Ukraine, Bloomberg News reported Thursday (March 28), citing sources familiar with the matter.
According to the report, the transaction in question traveled through Moscow-based crypto exchange Garantex using the dollar-pegged digital currency Tether.
Those transfers happened after Garantex was sanctioned by the U.S. and U.K. on suspicion of furthering financial crimes and illegal transactions in Russia, the sources said.
The $20 billion of transactions would represent one of the largest breaches of the sanctions imposed on Russia since the war began.
Sources told Bloomberg there was no indication of wrongdoing by Tether, which told the news outlet it cooperates with law enforcement to ensure that “every action is online, every transaction is traceable, every asset can be seized, and every criminal can be caught.”
Speaking with PYMNTS CEO Karen Webster in 2023, Chainalysis’ Kim Grauer used Garantex — sanctioned in 2022 — as an example of companies that were sanctioned but are still operating in a jurisdiction where they don’t care about sanctions.
Grauer, head of research at the blockchain intelligence and data platform, said that even in the midst of illegal activities like hacking and scams, it was sanctioning which represented that year’s biggest illicit transaction category.
The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) “started designating major international services as sanctioned entities, and so billions of dollars in transactions received by those platforms post-designation are now tracked as illicit funds, a full 43%,” Grauer told PYMNTS.
Thursday’s news comes three days after the OFAC cited 13 Russia-linked FinTechs for allegedly using cryptocurrency to evade sanctions.
“Russia is increasingly turning to alternative payment mechanisms to circumvent U.S. sanctions and continue to fund its war against Ukraine,” Brian Nelson, under secretary of the U.S. Treasury for terrorism and financial intelligence, said Monday (March 25).
“As the Kremlin seeks to leverage entities in the financial technology space, Treasury will continue to expose and disrupt the companies that seek to help sanctioned Russian financial institutions reconnect to the global financial system,” Nelson added.
