TLDR
- US Treasury’s OFAC sanctioned crypto exchange Garantex for the second time, along with its successor exchange Grinex and several executives
- Garantex processed over $100 million in illicit transactions since 2019, leading to $26 million in seized crypto and website shutdown
- Officials also sanctioned the Russian ruble-backed stablecoin A7A5 network, which processed $1 billion daily to evade international sanctions
- Three Garantex executives face charges including money laundering and sanctions violations, with one arrested in India
- The A7A5 token is backed by sanctioned Russian bank Promsvyazbank and has processed over $51 billion in cumulative transactions
The US Treasury’s Office of Foreign Assets Control imposed fresh sanctions on Thursday against a network of Russian cryptocurrency entities accused of facilitating money laundering and sanctions evasion. The action targets the shuttered exchange Garantex, its successor Grinex, and a ruble-backed stablecoin operation.
OFAC redesignated Garantex Europe to its sanctions list after initially sanctioning the exchange in 2022. The agency said Garantex processed more than $100 million in transactions tied to illicit activities since 2019.
The exchange had “willfully disregarded” Anti-Money Laundering and Combating the Financing of Terrorism requirements according to officials. US authorities working with German and Finnish police previously seized Garantex’s web domain and froze $26 million in crypto assets.
Following the enforcement action against Garantex, executives created Grinex as a successor exchange to continue operations. OFAC said Grinex transferred customer funds from Garantex and used alternative methods to restore access after the seizures.
The sanctions also target a Russian ruble-backed stablecoin called A7A5. The token was issued by Kyrgyzstan-based firm Old Vector for Russian users of A7 LLC, a cross-border settlement platform.
Stablecoin Network Processes Billions
A7A5 has grown rapidly this year, processing approximately $1 billion in daily transactions by July according to blockchain analytics firm Elliptic. Chainalysis estimated the token’s cumulative transaction volume exceeded $51 billion through July.
The stablecoin is backed by Russia’s state-owned Promsvyazbank, which was previously sanctioned for financing the defense industry. It is also connected to Moldovan politician Ilan Shor, who was convicted in a $1 billion bank fraud case.
OFAC sanctioned Old Vector, A7 LLC and its subsidiaries A71 and A7 Agent. The action blocks these entities from the US dollar-based financial system and bars US persons from interacting with them or more than a dozen associated crypto addresses.
Three Garantex executives were sanctioned including Sergey Mendeleev, Aleksandr Mira Serda and Pavel Karavatsky. Mendeleev’s firms InDeFi Bank and Exved were also sanctioned for allegedly enabling sanctioned Russian businesses to trade through crypto.
Executive Arrests and Charges
The US Department of Justice unsealed indictments against Garantex executives Aleksandr Mira Serda and Aleksej Besciokov in March. Besciokov was arrested while on holiday in India and faces charges for conspiracy to commit money laundering, conspiracy to violate US sanctions and conspiracy to operate an unlicensed money services business.
The US District Court for the Eastern District of Virginia issued a corrected warrant for Mira Serda’s arrest on August 6. He remained at large at the time of the sanctions announcement.
US authorities are offering up to $6 million in rewards for information leading to the arrest of Mira Serda or other Garantex executives. The rewards reflect the government’s priority in pursuing individuals involved in crypto-enabled sanctions evasion.
“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 John Hurley, under secretary of the Treasury for terrorism and financial intelligence. The action was coordinated with the US Secret Service and FBI to target digital asset channels used for ransomware and sanctions evasion.
