The US and UK investigate a $20 billion crypto probe on Russian sanctions evasion

The US and UK are analyzing more than $20 billion in cryptocurrency transactions that went through a Russia-based virtual exchange as part of allied efforts to combat sanctions evasion that is funding Putin’s war in Ukraine.

Since the full-scale Russian invasion, the Biden administration has attempted to limit cryptocurrency exchanges such as Garantex. Bloomberg reports that the $20 billion in transactions would rank among the most significant breaches of Russia’s sanctions since their implementation.

The investigation reveals the West’s ongoing effort to definitively shut off the flow of money into Russia regarding continuous sanctions evasion. 

Garantex is a useful tool for circumventing sanctions

The transfers under investigation were made through the Moscow-based crypto exchange Garantex and the dollar-pegged cryptocurrency Tether. The transfers were made after Garantex was sanctioned by the United States and the United Kingdom on suspicion of facilitating financial crimes and illicit transactions in Russia. 

Garantex was established in Estonia in 2019; however, the US government has stated that the majority of its operations now take place in the Federation Tower in Moscow. Estonia revoked its license to operate in the Baltic nation in February 2022 as part of an organized operation with the United States.

Garantex notes on its website that withdrawals can be made using cards from Sberbank of Russia PJSC, Tinkoff Bank JSC, and Alfa-Bank AO, all of which are Russian institutions sanctioned by the US and several of its allies.

Earlier this month, Garantex stated it wants to prevent the exchange from being used for illegal operations and has extensively cooperated with European and US authorities until it was sanctioned. It stated that it continues to collaborate with other foreign law enforcement agencies and avoids aiding prohibited operations.

US efforts to close sanctions loopholes

The United States has linked Garantex transactions to more than $100 million in unlawful activity, including those involving the Russian ransomware hacker organization Conti.

The US Treasury accused Garantex of allowing its systems to be “abused by illicit actors,” including violating its anti-money laundering and anti-terrorist financing duties, and announced its sanctions against the company in April 2022. 

Read more in our article: US-sanctioned crypto companies used by Russia to circumvent sanctions

In a sign of the US’s persistent focus on Garantex, the Treasury added peer-to-peer virtual currency exchange Bitpapa to its list of sanctioned companies, alleging connections to the company.

The importance of penalizing entities that help Russia circumvent sanctions

The circumvention of sanctions has enabled Russia to continue trading in prohibited items and purchasing dual-use missile and drone parts. Last week, in just a few days in March, the Putin dictatorship unleashed hundreds of missiles and drones into Ukraine, causing devastating infrastructural damage and demolishing homes in several Ukrainian cities. 

Experts claim that closing all of the loopholes that Russia exploits to avoid sanctions is critical to ensuring that sanctions work and deprive the Putin administration of funds for its war against Ukraine.