US Treasury re-designates Garantex crypto exchange for illicit activities

Investing.com -- The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has re-designated cryptocurrency exchange Garantex Europe OU for facilitating over $100 million in illicit transactions since 2019.

The action, announced Thursday, also targets Garantex’s successor exchange Grinex, three Garantex executives, and six associated companies in Russia and the Kyrgyz Republic.

"Digital assets play a crucial role in global innovation and economic development, and the United States will not tolerate abuse of this industry to support cybercrime and sanctions evasion," said Under Secretary of the Treasury for Terrorism and Financial Intelligence John K. Hurley.

OFAC initially designated Garantex in April 2022 under Executive Order 14024 for operating in Russia’s financial services sector. The new designation comes under cyber authorities pursuant to Executive Order 13694, as further amended.

The Treasury’s action follows collaborative efforts with U.S. law enforcement. On March 6, the U.S. Secret Service, working with German and Finnish authorities, seized Garantex’s web domain and froze over $26 million in cryptocurrency. The following day, the Department of Justice unsealed indictments against Garantex executives Aleksandr Mira Serda and Aleksej Besciokov, with Besciokov subsequently arrested in India.

After these enforcement actions, Garantex transferred its customer base and funds to Grinex in an attempt to continue operations despite sanctions. The State Department has offered rewards of up to $5 million for information leading to Mira Serda’s arrest and up to $1 million for information on other key Garantex leaders.

Founded in 2019 and originally registered in Estonia, Garantex conducts most operations from Moscow and Saint Petersburg. Analysis shows the exchange has processed transactions linked to darknet markets and ransomware groups, including Conti, Black Basta, LockBit, and others. Estonia revoked Garantex’s license in February 2022 after finding critical anti-money laundering deficiencies.

The Treasury also designated Grinex for being controlled by Garantex and facilitating billions in cryptocurrency transactions. Additionally, OFAC targeted several companies involved in Garantex’s scheme to help customers recover funds through the A7A5 token, a ruble-backed digital asset issued by Kyrgyzstani firm Old Vector.

Three Garantex executives were sanctioned: co-founder Sergey Mendeleev, co-owner and chief commercial officer Aleksandr Mira Serda, and co-owner and regional director Pavel Karavatsky. Two companies founded by Mendeleev—InDeFi Bank and Exved—were also designated for their roles in facilitating cryptocurrency transactions and sanctions evasion.

As a result of these actions, all U.S.-based property and interests of the designated individuals and entities are blocked, and U.S. persons are generally prohibited from transacting with them.

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