USDT transfers via Russia’s Garantex draw scrutiny from US and UK authorities

Authorities in both the United States of America and the United Kingdom have initiated investigations into transactions conducted through the Russian crypto exchange Garantex involving the USDT stablecoin, with a total transaction volume exceeding $20 billion. The transactions took place after the sanctions were imposed by both nations on Garantex due to suspicions of contributing illicit transactions and financial crimes within Russia. The investigations were prompted by the complexity and non-transparency of crypto transfers.

USDT Transfers via Russia’s Garantex Draw Scrutiny from US and UK Authorities

As of now, Tether, the issuer of the USDT stablecoin, has not provided any official statements regarding the ongoing investigations.

In the spring of 2022, the US Department of the Treasury levied accusations against Garantex for disregarding international obligations in combating terrorist financing and money laundering, leading to sanctions against the exchange. At that time, the Department alleged a connection between Garantex and illicit transfers totaling $100 million.

The representatives of Garantex have countered these claims, stating that there have been instances where AML analysts mistakenly identified wallets as belonging to Garantex, despite no interaction with the platform. They argue that the calculation of funds transferred through the platform may have been carried out in this way.

Furthermore, media reports have suggested Garantex’s involvement in financing Palestinian militants. But the company denied this information.

Despite recent efforts by the U.S. government to identify and penalise additional Russian firms using crypto to evade sanctions, a new investigation into Garantex suggests that the flow of funds to Russia remains largely uninterrupted even after more than a year of heightened scrutiny.

Russia has devised several alternative methods, including offshore oil transfers, technology exchanges facilitated by third countries, and encrypted crypto transactions, to evade sanctions.

Tether Holdings has stated that it has frozen the assets of entities whose addresses appear on the U.S. Treasury Department Office of Foreign Assets Control (OFAC) sanction list. According to Tether Holdings, every action taken with their platform is traceable online, and every asset is susceptible to seizure, ensuring that criminals can be identified and prosecuted with the cooperation of law enforcement agencies.

Despite these measures, efforts to prevent Russia’s evasion of sanctions have yet to prove fully effective.

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