An investigation by Eesti Ekspress and the ICIJ has uncovered troubling connections between Garantex, a Moscow-based crypto exchange, and various criminal and government entities, raising significant concerns about the potential misuse of the crypto sector by sanctioned and illicit actors. Following the mysterious death of a Garantex founding shareholder in 2020, the investigation reveals the company’s links to a convicted gang leader and the Kremlin-controlled oil firm Rosneft, signaling deep entanglements with the Russian government and criminal networks.
Garantex, known for its role as a cryptocurrency “mixer” on the darknet, has been implicated in laundering billions in cryptocurrency since its establishment, attracting clients involved in illegal narcotics, cybercrimes, identity theft, and even child sexual abuse material. The U.S. has already sanctioned Garantex for facilitating financial transactions for criminals, including a terror group closely associated with Hamas. The platform’s use by other designated terror organizations, such as Hezbollah, underscores the gravity of its operations.
Read our Garantex reports here on FinTelegram.
The shift in Garantex‘s corporate structure shortly after the death of one of its founders, Stanislav Drugalev, is particularly alarming. Drugalev’s replacement in corporate records by a shareholder with ties to Rosneft hints at a strategic alignment with Kremlin interests. This association with Rosneft, alongside the co-ownership of a debt-collection business with a convicted gang leader, accentuates the risks of Kremlin toleration or even exploitation of Garantex for state purposes.
The case of Garantex highlights the complex challenges the global crypto industry faces in combatting the use of digital currencies for illicit activities. Despite Garantex‘s assertions of cooperation with international law enforcement and efforts to prevent the misuse of its services for criminal endeavors, the findings suggest a sophisticated network adept at circumventing regulatory and legal scrutiny. The involvement of Garantex and its affiliates with criminal elements and the Russian government underscores the pressing need for more robust international cooperation and regulatory oversight to address the vulnerabilities of the cryptocurrency sector to exploitation by malign actors.
For further details, refer to the original report by the International Consortium of Investigative Journalists (ICIJ).
