- The European Union has sanctioned Garantex, a Moscow-based cryptocurrency exchange, for its role in facilitating illicit financial transactions
- Authorities have linked Garantex to Russian banks already under EU sanctions, allowing the conversion of rubles into cryptocurrency for cross-border transfers
- This action marks a significant step in cracking down on crypto exchanges that enable financial circumvention of international restrictions
The European Union has imposed sanctions on Garantex, a cryptocurrency exchange operating in Moscow, for its role in providing financial services to Russian banks under sanctions. This move, which echoes action taken by the U.S. in 2022, follows broader regulatory efforts to prevent digital assets from being used to bypass economic restrictions. Garantex has facilitated transactions that allow the exchange of rubles into cryptocurrency, enabling customers to move funds internationally despite sanctions.
Garantex Aided Sanctioned Entities
The inclusion of Garantex in the EU’s sanctions list aligns with previous regulatory actions against financial institutions involved in similar practices. The exchange has been flagged for enabling clients of Sberbank, T-Bank (formerly Tinkoff Bank), and Alfa-Bank—already sanctioned under Regulation (EU) No 269/2014—to access the global financial system through cryptocurrency transactions.
Authorities claim that such activity undermines the effectiveness of imposed restrictions, with the EU noting in a regulatory document that, by offering deposit and withdrawal services to customers of those three banks, Garantex is now associated with them.
Already Sanctioned in U.S.
Garantex was founded in late 2019 by Russian tech specialist Stanislav Drugalev and local Moscow politician Sergey Mendeleev and was initially registered in Estonia as Garantex Europe. The exchange enabled the conversion of rubles into digital assets that can be exchanged internationally, but with increasing global scrutiny on crypto platforms suspected of enabling illicit financial flows, exchanges like Garantex have come under investigation.
As a result, Garantex was sanctioned by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) in April 2022, a punishment now extended to Europe. European regulators assert that the services offered by Garantex effectively provide a backdoor for institutions restricted under international sanctions to continue cross-border transactions.
The exchange’s known blockchain wallet addresses, which include ETH, BTC, BSC, and TRX networks, have also been flagged by regulators, further tightening financial surveillance on its activities.
The crackdown on Garantex reflects a broader trend of heightened regulatory oversight in the cryptocurrency industry. Governments worldwide are increasingly focusing on preventing crypto platforms from being used to circumvent sanctions. The EU’s latest move signals a firm stance against financial entities that facilitate restricted transactions, reinforcing regulatory frameworks governing digital assets.
