The US and British governments have launched a joint investigation into crypto transactions worth more than $20 billion that may have violated Russian sanctions, Bloomberg News reported on March 28.
The transactions, believed to be through Russia-based crypto exchange Garantex, are intended to circumvent international sanctions and possibly finance military activities in Ukraine.
In recent months, the US has increasingly cracked down on the use of crypto to circumvent sanctions. Recently, it sanctioned crypto wallets linked to GAZA Now.
Evasion of sanctions
The Moscow-based exchange is said to have processed these significant amounts using Tether’s stablecoin USDT, despite sanctions imposed on the company by both countries for its alleged role in financial crimes and facilitating illegal transactions within Russia.
Despite the extensive sanctions against Russia, Western countries have faced challenges in cutting off financial inflows into the country.
Russia is reportedly using several strategies to evade these sanctions, including conducting offshore transactions, technology exchanges through intermediary countries and using encrypted digital currency transactions, which are halting the West’s attempts to stop financial support for Putin’s regime making it more difficult.
The Biden administration has intensified its focus on crypto exchanges like Garantex to disrupt Russian financial channels. The $20 billion under scrutiny highlights the complex struggle to effectively implement financial sanctions.
While the investigation is ongoing, there is no immediate allegation of wrongdoing against Tether Holdings.
Response from Tether
In a statement, Tether Holdings expressed its commitment to adhering to compliance standards and its continued cooperation with law enforcement agencies. The company has taken steps to freeze assets linked to entities on the US sanctions list, helping in the fight against illicit financial activity.
Garantex remains silent in light of the investigation. Both the US Treasury Department and British counterparts, including the Treasury and National Crime Agency, have refrained from commenting on the ongoing investigation.
Garantex was founded in Estonia in 2019 and later moved most of its operations to Moscow following regulatory challenges and the revocation of its operating license.
The exchange previously faced accusations from the US Treasury Department of illegal activities and ignoring anti-money laundering protocols.