In 2021, FinTelegram exposed the Russian crypto exchange Garantex as a scam facilitator and money laundromat. In 2022, the Estonian FIU, as the competent regulatory authority, revoked the crypto license of the crypto exchange over money laundering issues. In a recent report by Angus Berwick for the WSJ, the resilience and growth of Moscow-based Garantex, despite being sanctioned by the U.S., was highlighted. However, a year later, Garantex is thriving.
Despite its placement on the U.S. blacklist, Garantex has become a significant channel for Russians to transfer funds in and out of the country. U.S. authorities have also identified it as a means for Russian cybercriminals to launder their earnings. Since Russia invaded Ukraine in February 2022, at least $7 billion has flowed through Garantex, WSJ found.
Read the FinTelegram Garantex Expose here.
According to the WSJ report, Garantex played a pivotal role in the financing of Palestinian militants, as evidenced by the October 7 attacks in Israel. Digital wallets controlled by Palestinian Islamic Jihad, which collaborated with Hamas for the attacks, received part of $93 million via Garantex. This highlights the increasing complexity of tracking terrorist financing with the rise of digital currencies.
In Russia, Garantex facilitates the conversion of rubles into other currencies, especially in the wake of sanctions on Russian banks post the Ukraine invasion. WSJ reports, that the platform processed customer transactions worth approximately $865 million in July, a significant increase from the month it was sanctioned.
The surge in Garantex’s operations underscores the challenges faced by the Biden administration in their efforts to suppress Russia’s economy using traditional financial tools. The crypto exchange’s growth also raises concerns about the efficacy of U.S. sanctions against entities that operate in hostile territories.
Garantex, launched in 2019, is the leading crypto exchange in Russia for ruble trading. Its increasing popularity among criminal groups for laundering illicit funds has been noted by the U.S. Treasury. However, Garantex’s communications director, Evgenia Burova, refuted these claims, emphasizing the exchange’s commitment to anti-money laundering practices.
The exchange’s clientele has expanded to include ordinary Russians and local businesses seeking efficient methods to transfer large sums of rubles. Garantex‘s operations have seen a significant surge, especially after the U.S. and European Union intensified sanctions on Russian banks.
The story of Garantex‘s ascent is a testament to its founders’ vision and the evolving landscape of global finance. Despite challenges, including the mysterious death of co-founder Stanislav Drugalev in Dubai, the exchange continues to grow and adapt.
Garantex‘s ability to navigate the sanctions and continue its operations highlights the limitations of traditional financial tools in a digital age, Angus Berwick concludes in his report.
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