Tether Freezes $27M USDT Linked to Garantex, Shuts Down Russian Exchange

Tether, the issuer of the widely used stablecoin USDT, has taken a significant step by freezing $27 million in USDT linked to Garantex, a major cryptocurrency exchange in Russia. This move has led to the shutdown of Garantex, which has been under increasing pressure from U.S. and European regulators for allegedly facilitating illicit transactions tied to Russian financial networks. The suspension of Garantex's operations was announced on its Telegram channel, where the exchange accused Tether of waging a "war against the Russian crypto market."

Tether's action has sparked a wave of reactions within the cryptocurrency community. Garantex, in a March 6 Telegram post, stated that Tether had blocked its wallets, resulting in a halt to all trading and withdrawals. The exchange vowed to fight back, warning users that their USDT holdings in Russian wallets were now at risk. This development has raised concerns among Russian cryptocurrency users, who fear that centralized stablecoins could be used as a tool to enforce sanctions and limit liquidity.

Garantex has a history of facing sanctions. In April 2022, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned the exchange for handling illegal transactions associated with ransomware gangs, darknet markets, and Russian financial networks. Reports indicate that Garantex was involved in payments related to the defunct Hydra marketplace and the notorious Conti ransomware gang. Despite these sanctions, Garantex continued to operate using sanctioned Russian banks. However, Tether’s freeze on its wallets has now forced the exchange into a temporary shutdown.

The recent crackdown on Garantex comes after the European Union added the exchange to its 16th package of sanctions against Russia, targeting financial networks funding Moscow. This move highlights the growing concern among regulators that sanctioned crypto exchanges are exploiting enforcement loopholes to evade financial restrictions, making it more difficult to track illegal transactions related to cybercrime and money laundering. The freeze on USDT funds by Tether marks a harder crackdown on Russia’s exposure to international crypto markets.

The freezing of USDT funds has left many Russian traders and investors in uncertainty. Users holding USDT in Garantex wallets face potential losses, and the suspension of the exchange has affected trading activity. Some experts believe that this action may drive Russian crypto traders to other stableco