Sanctioned Garantex Resumes Operations as Grinex, Shifts $60M in Stablecoins

Sanctioned crypto exchange Garantex has reportedly resumed operations under a new name, Grinex, after transferring millions of dollars in ruble-backed stablecoins. According to a Swiss blockchain analytics company, Garantex shifted liquidity and customer deposits to Grinex, which is believed to be its full-fledged successor. The analytics company found onchain data showing that Garantex laundered over $60 million worth of ruble-backed stablecoins called A7A5 and sent them to addresses associated with Grinex. The movement of funds, including the systematic transfer of A7A5 liquidity and the use of one-time-use wallets, provided clear onchain proof of the link between the two exchanges.

Garantex's manager reportedly confirmed that customers have been visiting the exchange office in person and moving funds from Garantex to Grinex. Additionally, offchain indicators such as transactional patterns and exchange behaviors further reinforced this connection. The description of Grinex on a Russian crypto tracking site also claimed that the owners of Garantex created it, indicating that Grinex is not an independent entity but rather a successor to Garantex, continuing its financial operations despite the exchange’s official shutdown.

Garantex was first hit with sanctions by the US Department of the Treasury’s Office of Foreign Assets Control in April 2022 for allegedly money laundering violations. On March 6, the US Department of Justice collaborated with authorities in Germany and Finland to freeze domains associated with Garantex, which they claim processed over $96 billion worth of criminal proceeds since launching in 2019. Stablecoin operator Tether also froze $27 million in Tether (USDT) on March 6, which forced Garantex to halt all operations, including withdrawals. Only a few days later, on March 12, officials with India’s Central Bureau of Investigation arrested Aleksej Bešciokov, who allegedly operated Garantex, on US charges that included conspiracy to commit money laundering.

Garantex's ability to shift millions of dollars despite being under sanctions highlights the challenges faced by regulators in monitoring and controlling the flow of funds in the crypto space. The exchange's move to reboot its platform under a new name raises questions about the effectiveness of sanctions in curbing the activities of crypto exchanges involved in illegal activities. The situation with Garantex serves as a reminder of the need for more robust regulatory frameworks to prevent the misuse of crypto exchanges for illegal activities. The crypto community will continue to watch Garantex's actions closely, as the exchange's future remains uncertain.