The United States (US) and the United Kingdom (UK) have initiated investigations into digital asset transactions exceeding $20 billion that have traversed through the Russia-based cryptocurrency exchange Garantex, leveraging Tether's stablecoin USDT.
The substantial magnitude of these transactions, coupled with their association with Garantex and the stablecoin, has sparked concerns within regulatory circles, prompting a closer examination into potential violations of sanctions and illicit financial practices.
Notably, the US Treasury's Office of Foreign Assets Control (OFAC) imposed sanctions on Garantex and Hydra Market in April 2022, citing their alleged ties to ransomware syndicates and illicit drug markets on the dark web.
Although Garantex was originally established in Estonia in 2019, authorities allege that its primary operations are now headquartered in the Federation Tower in Moscow, further intensifying regulatory scrutiny.
According to sources familiar with the investigation, substantial payments totalling $20 billion are under scrutiny following Garantex's sanctioning by both the US and UK due to suspected involvement in facilitating illicit financial activities within Russia.
The sanctioned crypto exchange Garantex has been under scrutiny for its connections to violent debt collectors, a convicted gang leader, and a Russian state oil company, as revealed by an international coalition of journalists.
Investigations led by Estonian newspaper The Eesti Ekspress and the International Consortium of Investigative Journalists (ICIJ) unveiled that the death and subsequent replacement of one of Garantex’s shareholders led to the emergence of a new shareholder with ties to the Kremlin and the Russian state oil industry.
It was further disclosed that both Garantex's crypto educational platform, the Garantex Academy, and its mobile app in Russia are operated by Fintech Corporation LLC.
The company's ownership structure reveals intriguing connections: former Garantex Europe director Aleksandr Ntifo-Siao shares ownership of Fintech with Pavel Karavatsky, a Russian executive allegedly linked to the Kremlin and state oil giant Rosneft.
According to Russian public records, Aleksandr Ntifo-Siao changed his name to Alexander Joseluisovich Mira Serda.
According to media reports, Rosneft acquired Targin in 2016.
Subsequently, a separate entity named Targin Logistics LLC emerged three years later, as indicated in the Russian corporate registry.
While the records do not explicitly establish a connection between the two entities, there is a notable development: Targin Logistics underwent a name change to Fintech Corporation in 2020, coinciding with Pavel assuming the role of CEO.
Intriguingly, Fintech Corporation initially retained the contact details of Rosneft's logistics unit, including phone numbers, email addresses, and even the internet domain "RN," as per Russian public records examined by Eesti Ekspress.
Igor Sechin, Rosneft's CEO, is a prominent figure with purported close ties to the FSB, Russia's security service.
Igor Sechin and Rosneft have faced sanctions from numerous allies of Ukraine, including the EU and UK, following the 2022 invasion.
Fintech's interests extend beyond digital education; it also owns 50% of a debt collection agency known as the Academy of Conflicts.
This agency, however, shares ownership with Alexander Tsarapkin, a convicted gang leader who in 2016, received a seven-year sentence in a penal colony for extortion schemes.
Court records from his case reveal a harrowing incident dating back to 2013, wherein a Moscow businessman faced severe repercussions for a debt owed to an associate.
In a disturbing turn of events, the businessman was subjected to a brutal assault by three assailants near his residence.
A week later, his wife fell victim to a vicious attack, enduring stabbing wounds inflicted by an assailant armed with an awl and a syringe.
Threats of further harm, including the injection of blood purportedly contaminated with AIDS, added to the trauma.
Subsequent events unfolded with alarming intensity: the targeted arson of the wife's vehicle, followed by another assault on the husband, resulting in severe injuries including a broken nose and the loss of teeth, as documented in court records and reported by Russian media outlets.
The assailant, according to the wife's testimony, had threatened to "burn her face with acid, blow her up so that her limbs would be torn off, stab her again with an infected needle, and find and deal with the children."
Despite its ominous name, the Academy of Conflicts claims to engage in "problem-solving" activities.
On its website, it prominently displays Alexander Tsarapkin donning boxing gloves (as seen in the screenshot of the website below), showcasing his confidence to prospective clients:
"You will no longer have to negotiate conflicts and participate in situations that immerse you in an uncomfortable environment."
Garantex's founding duo, tech specialist Stanislav Drugalev and local Moscow politician Sergey Mendeleev, established the exchange in 2019.
Both were later listed as shareholders alongside Aleksandr Ntifo-Siao in 2021.
However, the trajectory of Garantex's ownership took a dramatic turn in February 2021 when Stanislav tragically died in a car accident, plunging off a bridge in Dubai.
With regard to the death of one of its founders, Garantex commented:
"Questions regarding the circumstances of Mr. Drugalev's death should be addressed to UAE law enforcement. Comments and suggestions offered by any third party are nothing more than speculations, for which those offering them bear no liability."
Amidst suspicions of foul play and allegations of a "criminal death" raised by his wife, Oksana Drugaleva, his role was left vacant.
Notably, Irina Chernyavskaya, reportedly a partner of Pavel, subsequently assumed Sergey's position as a Garantex shareholder.
Pavel's connections add an intriguing layer to the narrative; he is said to be closely associated with former FSB general Oleg Feoktisov.
Oleg’s ties to the FSB, Russia's successor to the KGB, are significant, given Pavel’s reported employment at Peresvet Bank while Oleg served as the bank's presidential advisor.
It is worth noting that during this period, Russia's state oil giant Rosneft acquired Peresvet Bank, further entangling Garantex's ecosystem with entities linked to the Russian state and intelligence apparatus.
What's more, Garantex has allegedly transferred $238 million worth of bitcoin to wallets controlled by illicit darknet operators and $15 million worth of crypto to wallets that Israel claims are linked to Hezbollah and Qud Forces, both designated terrorist organisations.
Richard Sanders, a digital forensics analyst, suggests that Russia's interest in Garantex's operations extends beyond mere criminal prosecution.
He expressed that:
"The intelligence value that can be obtained by the Russian government far outweighs their desire to prosecute criminals that by and large profit off of what the government considers to be unfriendly nations. Garantex has dark[net] markets and ransomware groups as top clients."
Garantex refrained from commenting on various aspects of its corporate structure in Russia, its relationship with Fintech, purported criminal affiliations, and alleged ties to the Kremlin.
Instead, the exchange emphasized its commitment to refraining from facilitating criminal financial activities and expressed dedication to preventive measures against such illicit practices.
The statement said:
"Not only do we stay away from facilitating criminal financial activities, but we also do our best to help prevent them, particularly by trying to initiate a revival of cross-border cooperation aimed at investigating and preventing illicit transactions."
Denying any involvement with groups designated as terrorists, Garantex dismissed the allegations as unfounded, attributing them to what it described as a misinterpretation of cryptocurrency transactions between Virtual Asset Service Providers (VASPs) based in Gulf countries.
Yevhenii Panchenko, the head of Ukraine's Cyber Police Department, shared that following the imposition of sanctions on Garantex, the exchange discontinued its collaboration with Ukrainian crypto entities, resulting in a significant reduction in its transaction volume to approximately one-third of its pre-sanctions levels.
However, Yevhenii noted that Garantex continues to facilitate millions of dollars' worth of transactions each month.
A $20 billion USDT transaction through Russia's Garantex exchange has sparked international investigations, possibly breaching sanctions, with US and UK governments scrutinizing the involvement of shadow banking and geopolitical motives.
Alex通过俄罗斯 Garantex 交易所进行的 200 亿美元 USDT 交易引发了国际调查，可能违反制裁，美国和英国政府正在审查影子银行的参与和地缘政治动机。
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Cheng YuanThe attackers are believed to be the infamous North Korean hacker group Lazarus, as per blockchain security firm Elliptic.
CoindeskBefore moving the stolen funds to Garantex, the hackers used the on-chain trading platform 1inch to exchange the assets for USDT.
cryptopotatoThe sanctions are part of an international effort to "(block) the expansion of malicious cybercrime services, dangerous drugs and other illicit products".
CointelegraphThe sanctions were part of an international effort aimed at “[disrupting the] proliferation of malicious cybercrime services, dangerous drugs and other illegal offerings.”
Cointelegraph