The Council of the European Union added Russian cryptocurrency alternate Garantex to their newest sanctions bundle final week for being “carefully related to EU-sanctioned Russian banks,” marking the council’s first time sanctioning a crypto alternate.
The sanctions to Garantex– which the U.S. already sanctioned in April 2022– come almost a 12 months after an investigation by Eesti Ekspress and the Worldwide Consortium of Investigative Journalists discovered {that a} agency with a number of connections to Garantex co-owns a debt-collection enterprise with a convicted gang chief and has ties to Rosneft, the Kremlin-tied oil agency.
“This bundle continues concentrating on actors liable for circumventing EU sanctions, together with by third international locations,” the EU announcement reads. “The European Union stays able to step up strain on Russia.”
Initially registered in Estonia as Garantex Europe, Garantex was based in 2019 by Stanislav Drugalev, a Russian tech specialist, and Sergey Mendeleev, a neighborhood politician in Moscow; Aleksandr Ntifo-Siao, the corporate’s industrial director, co-owned the corporate.
Garantex grew to become the most important crypto foreign money alternate in Russia, with workplaces at one level in one in every of Moscow’s high enterprise areas, the Federation Tower skyscrapers. The corporate discovered a distinct segment as a solution to convert rubles into different currencies, which grew to become harder after the invasion of Ukraine amid sanctions on Russian banks and Moscow’s personal capital controls.
Garantex additionally permits individuals to make use of cryptocurrencies to make international transfers. Clients deposit rubles in money at Garantex’s workplaces to obtain the equal worth in a cryptocurrency, which then is exchanged with a standard foreign money. With cryptocurrencies, the transactions themselves are seen on a public ledger, often known as a blockchain, however the events’ identities are shielded.
ICIJ’s 2024 investigation revealed that inside weeks of one of many alternate’s three founding shareholders dying beneath suspicious circumstances, one other was changed in company information by a shareholder linked to Rosneft.
Primarily based on court docket and company information and a overview of transactions on the Garantex alternate, the investigation additionally discovered that Garantex– which had been sanctioned for transferring cash for criminals and later related to a terror group near Hamas – was utilized by different designated terror teams, together with Hezbollah, in addition to drug gangs in Ukraine and different felony actors.
In an announcement to ICIJ in 2024, Garantex declined to touch upon its company construction or its affiliate’s Russian authorities and felony ties.
Garantex stated it seeks to forestall the usage of the alternate for illicit actions and actively cooperated with European and U.S. authorities till the U.S. imposed sanctions on the alternate in April 2022. The corporate stated it nonetheless cooperates with different worldwide regulation enforcement companies.
“Not solely can we keep away from facilitating felony monetary actions, however we additionally do our greatest to assist forestall them, notably by attempting to provoke a revival of cross-border cooperation aimed toward investigating and stopping illicit transactions,” the assertion stated.
