Tether, the issuer of the USDT stablecoin, has frozen approximately $27 million worth of USDT belonging to the Russian cryptocurrency exchange Garantex.
The move comes as a direct response to the latest round of sanctions imposed by the European Union, targeting financial institutions linked to Russia.
The frozen assets, valued at around 250 million rubles, have severely impacted Garantex’s operations, forcing the exchange to halt withdrawals and temporarily suspend its platform.
In response, Garantex has placed its website under maintenance and acknowledged that all USDT funds in Russian wallets could now be at risk.
Despite these challenges, the exchange has expressed its determination to resist the sanctions and explore alternative solutions to continue its services.
European Union Intensifies Sanctions Against Garantex Over Russia-Ukraine Conflict
The European Union’s decision to sanction Garantex marks a significant escalation in its financial restrictions against Russia amid the ongoing Russia-Ukraine conflict.
Announced on February 26, this is the first time the EU has directly targeted a cryptocurrency exchange in Russia, signaling a tougher stance on crypto-based financial channels.Â
The EU accused Garantex of having ties to Russian banks that are already under sanctions and suggested that the exchange has been used to bypass existing financial restrictions.
The move aligns with previous actions taken by U.S. regulators and reflects growing international cooperation in curbing Russia’s access to global financial systems through cryptocurrency.
Garantex’s Ongoing Struggles With Global Regulatory Authorities
Garantex has been under regulatory scrutiny since April 2022, when the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) first added the exchange to its sanctions list.
U.S. authorities accused Garantex of facilitating illicit transactions, including those linked to ransomware payments and other criminal activities.
Despite these allegations, the exchange continued operating, mainly within Russia, and maintained access to Tether’s USDT stablecoin until now.
The recent freeze of its USDT holdings has raised questions about Tether’s compliance strategy and whether it will take further action against other sanctioned entities.
So far, Tether has not issued an official statement regarding the decision, leaving uncertainty about its long-term stance on regulatory enforcement.
Impact on Russian Crypto Markets and Future Regulatory Challenges
The freezing of Garantex’s USDT assets is expected to have a ripple effect on the Russian cryptocurrency market, where stablecoins like USDT play a vital role in cross-border transactions.
As one of the largest exchanges serving Russian users, Garantex’s financial troubles could lead to reduced liquidity and trading activity for Russian investors.
Moreover, this incident underscores the increasing pressure on cryptocurrency platforms operating in sanctioned jurisdictions.
As global regulators tighten restrictions, exchanges and stablecoin issuers are facing growing scrutiny over their role in facilitating transactions for sanctioned entities.
The crypto industry will closely monitor Tether’s response and whether other firms follow suit in complying with international sanctions.
Other Crypto Sanction Developments and Global Regulatory Shifts
The Garantex case is part of a broader trend of increasing regulatory actions against cryptocurrency exchanges and platforms.
In a separate development, a U.S. court recently reversed sanctions against Tornado Cash, a cryptocurrency mixing service previously accused of laundering $455 million in stolen funds for North Korean hackers.
The legal victory led to a 118% surge in the price of Tornado Cash’s native token, TORN. Meanwhile, Deribit, a leading crypto derivatives exchange, has announced its exit from Russia due to EU sanctions, restricting access for Russian users.
On a more positive note, Bybit has successfully removed itself from France’s AMF blacklist and is now working toward obtaining a MiCA license to operate across the European Union.
These cases highlight the evolving regulatory landscape for crypto firms and the growing importance of compliance in maintaining global market access.
Also Read: U.S. Court Reverses Sanctions Against Tornado Cash, $TORN Price Jumps 118%