The European Union has imposed sanctions on the Russian cryptocurrency exchange Garantex, accusing it of facilitating money laundering by Russian oligarchs and terrorist groups.
This is the first time the EU has imposed restrictions on a Russian crypto exchange.
According to the official statement, Garantex has close financial ties with several Russian banks that are already under EU sanctions, including Sberbank, T-Bank (formerly Tinkoff), and Alfa-Bank.
The European Union announced its 16th package of sanctions against Russia on February 24. Among the new sanctions targets is cryptocurrency exchange Garantex, which has already been under sanction by the US for three years.
The EU said in a statement that it was targeting players responsible for circumventing previous sanctions, such as Garantex, due to its close association with EU-sanctioned Russian banks. Garantex has arrangements with sanctioned Russian banks to convert cryptocurrency into Fiat and vice versa, enabling the uncontrolled transfer of funds into Russia.
This is the first time the EU has sanctioned a cryptocurrency exchange. Garantex communications director Evgenia Burova told Russian news agency RBC that the new sanctions are a “recognition of the role of cryptocurrency in the global financial market.”.
The EU has sanctioned more than 2,400 individuals and entities. The sanction means that EU citizens and companies are prohibited from making assets available to the targeted entities. Nevertheless, the new sanctions will have no impact on the exchange or its users, Burova said.
The blockchain analytics firm Blockchain found in a report in September that US sanctions on Garantex had had little effect on its operations. Other exchanges saw a drop in activity after being sanctioned, and foreign cryptocurrency exchanges largely abandoned the country.
The EU has already imposed restrictions on Russian crypto users. Since October 2022, the EU has banned cryptocurrency transactions with Russian citizens or entities and the provision of wallet services.
Established in 2019, Garantex has become a key platform for cryptocurrency trading in Russia, especially for transactions in rubles.
The exchange actively promoted its liquidity and the ability to conduct transactions without restrictions for Russian users. It supported payments in rubles and all Russian bank cards.
There were reports that Russia is using cryptocurrency payments to circumvent existing Western sanctions against its economy and military-industrial complex.
The EU sanctions were another blow to Garantex, which has been under US restrictions since April 2022. US regulators accused the exchange of laundering more than $100 million in illegal funds through it.
