Tether's $27M Freeze Shuts Down Russian-Linked Exchange Garantex

Garantex Halts Operations Amid Tether's USDT Blockade

Tether’s decision to freeze $27 million worth of USDT on Garantex has forced the sanctioned Russian-linked exchange to suspend its operations, escalating tensions surrounding financial restrictions on Russia’s crypto industry. In a March 6 Telegram post, Garantex confirmed a temporary halt to all crypto trading and withdrawals, attributing the move to Tether’s actions. The exchange claimed that its wallets, holding over 2.5 billion rubles in USDT, had been blocked, leaving it no choice but to shut down services while it sought a resolution.

Garantex condemned Tether’s decision, arguing that it posed a broader threat to Russian crypto holders relying on USDT. The exchange warned that this action could set a dangerous precedent, making all Russian-based USDT assets vulnerable to similar freezes. Garantex pledged to fight back, asserting that while it may be the first exchange impacted, it likely won’t be the last. 

Tether has yet to issue an official response or clarify its reasoning behind the freeze. With a market capitalization exceeding $140 billion, Tether’s influence in the stablecoin market remains unmatched, and its latest move underscores the growing scrutiny of Russian-linked crypto transactions.

Garantex has been under mounting regulatory pressure due to allegations that it facilitated illicit financial transactions for Russia. The U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned the exchange in April 2022, accusing it of helping Russia bypass Western financial restrictions. The European Union followed suit with its own sanctions, citing Garantex’s ties to Russian banks already under EU restrictions. This marked the first time the EU directly targeted a Russian crypto exchange, signaling an intensification of enforcement measures against digital asset platforms suspected of aiding sanctions evasion.

Regulators in the U.S. and U.K. are also investigating Garantex over allegations that it facilitated more than $20 billion in transactions designed to circumvent financial restrictions. Authorities suspect the exchange played a role in Russia’s broader efforts to maneuver funds amid ongoing geopolitical conflicts. The latest freeze by Tether adds another layer to the already complex regulatory battle, raising questions about the future of Russian-linked USDT transactions and whether additional crypto platforms could face similar actions.

This article has been refined and enhanced by ChatGPT.