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Major Sanctions Imposed on Russian Cryptocurrency Exchanges
Recent actions by the US Treasury’s Office of Foreign Assets Control (OFAC) have targeted two prominent Russian cryptocurrency exchanges, Garantex and its successor Grinex, for allegedly facilitating over US$100 million (approximately AU$153.97 million) in illicit transactions since 2019. These sanctions highlight ongoing concerns regarding the use of digital currencies in criminal activities such as hacking, ransomware, terrorism, and drug trafficking.
Background of Sanctions
The OFAC has not only red-flagged Garantex Europe but has also specifically sanctioned Grinex, along with several key executives: Sergey Mendeleev, Aleksandr Mira Serda, and Pavel Karavatsky. Companies connected to Mendeleev, including InDeFi Bank and Exved, have also come under scrutiny for their roles in enabling crypto trading for businesses that are already under sanctions.
Additionally, the sanctions extend to the Kyrgyzstan-based firm Old Vector and its subsidiaries, which issued the ruble-pegged stablecoin A7A5. This token, used by Russian clients on the cross-border platform A7 LLC, has ties to sanctioned entities such as Russia’s state-backed Promsvyazbank and the Moldovan political figure, Ilan Shor.
The Scope of Illicit Activities
According to OFAC officials, Garantex has processed significant sums linked to criminal enterprises that have inflicted serious harm on victims within the US. During the period from April 2019 to March 2025, it is reported that the exchange managed transactions exceeding US$96 billion (approximately AU$14.78 billion) in cryptocurrency. These revelations come after previous sanctions in 2022, which had penalised Garantex for disregarding Anti-Money Laundering (AML) protocols and other anti-terrorism financing regulations. At that time, authorities seized US$26 million (about AU$40.03 million) in cryptocurrency, shut down the exchange’s website, and indicted two of its executives.
Government Officials Weigh In
John Hurley, the Under Secretary of the Treasury for Terrorism and Financial Intelligence, emphasised the serious implications of leveraging cryptocurrency exchanges for illicit activities. He stated, “Exploiting cryptocurrency exchanges for money laundering and ransomware threatens US national security and undermines the legitimacy of reputable virtual asset providers.” Hurley also underscored the importance of digital assets for global innovation and economic growth, reiterating the US government’s position that the misuse of this sector to facilitate cybercrime will not be tolerated.
Collaborative Efforts to Combat Illicit Activity
The sanctions have been coordinated with the US Secret Service and the FBI to effectively sever the digital asset avenues employed in illegal activities. This is indicative of a broader strategy aimed at safeguarding the financial system from threats posed by cryptocurrency misuse.
In summary, the recent sanctions targeting Garantex and Grinex reflect a vigilant stance by US authorities against unlawful activities associated with cryptocurrency. The government’s ongoing efforts highlight the delicate balance of leveraging digital assets for economic development while protecting the financial ecosystem from exploitation by criminal enterprises.
