Treasury Sanctions Cryptocurrency Alternate and Network Enabling Sanctions Evasion and Cyber Criminals

WASHINGTON — Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) is re-designating the cryptocurrency alternate Garantex Europe OU (Garantex), which has immediately facilitated infamous ransomware actors and different cybercriminals by processing over $100 million in transactions linked to illicit actions since 2019.  OFAC can also be designating Garantex’s successor, Grinex, and taking motion towards three executives of Garantex and 6 related corporations in Russia and the Kyrgyz Republic which have supported the alternate’s involvement in malicious cyber actions. 

“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.  Exploiting cryptocurrency exchanges to launder money and facilitate ransomware attacks not only threatens our national security, but also tarnishes the reputations of legitimate virtual asset service providers,” mentioned Under Secretary of the Treasury for Terrorism and Financial Intelligence John Okay. Hurley.  “By exposing these malicious actors, Treasury remains committed to and supportive of the digital asset industry’s integrity.”

OFAC beforehand designated Garantex on April 5, 2022 pursuant to Executive Order (E.O.) 14024 for working or having operated within the monetary companies sector of the Russian Federation financial system.  As a results of its central function in facilitating malicious cyber-enabled actions and working because the alternate of selection for cybercriminals, OFAC can also be taking actions underneath its cyber authorities to designate Garantex pursuant to E.O. 13694, as additional amended by E.O. 14144 and E.O. 14306 (“E.O. 13694, as further amended”).  Grinex, together with Garantex’s executives and associate corporations, are additionally being designated pursuant to E.O. 13694, as additional amended.    

This designation builds on OFAC’s September 2024 sanctions towards Cryptex and the Financial Crimes Enforcement Network’s identification of PM2BTC, two different cryptocurrency exchanges which have offered monetary companies to cybercriminals, in addition to OFAC designations of 5 cryptocurrency exchanges–SUEX, Chatex, Bitpapa, NetEx24, and AWEX–which have facilitated illicit exercise since as early as September 2021.

AN INTERNATIONAL EFFORT TO STOP CYBERCRIMINALS 

Today’s motion is taken in collaboration with the U.S. Secret Service’s Cyber Investigative Section, with help from the Federal Bureau of Investigation. 

On March 6, 2025, the U.S. Secret Service, in partnership with German and Finnish legislation enforcement, took disruptive measures towards Garantex’s laptop infrastructure, together with seizing its internet area and freezing over $26 million in cryptocurrency managed by Garantex.  On March 7, 2025, the Department of Justice unsealed indictments towards Garantex executives Aleksandr Mira Serda and Aleksej Besciokov.  Following the unsealing of the indictments, Aleksej Besciokov was arrested in India.  After these disruptive measures had been taken, Garantex moved its buyer base and funds to its successor alternate, Grinex, in an try and proceed working regardless of sanctions and legislation enforcement actions. 

Additionally, the Department of State has introduced two reward affords underneath the Transnational Organized Crime Rewards Program of as much as $5 million for info resulting in the arrest and/or conviction of Mira Serda and as much as $1 million for different key leaders of Garantex.    

GARANTEX IS USED TO LAUNDER ILLICT FUNDS

Garantex is a cryptocurrency alternate based in late 2019, initially registered in Estonia, that conducts most of its operations from Moscow and Saint Petersburg.  Analysis exhibits that over $100 million of identified Garantex transactions are related to illicit actors, together with darknet markets and ransomware teams.  In February 2022, Garantex misplaced its Estonian license to offer digital asset companies after Estonia’s Financial Intelligence Unit revealed vital anti-money laundering and countering the financing of terrorism (AML/CFT) deficiencies and located connections between Garantex and wallets used for prison exercise. 

Most of the funds despatched to Garantex, which has maintained accounts for a whole lot of 1000’s of customers, got here from different cryptocurrency exchanges used for prison conduct.  Once prison customers place their funds with Garantex, these actors launder their ill-gotten funds utilizing Garantex’s alternate companies.  After OFAC’s designation and the Estonian Financial Intelligence Unit’s enforcement motion in 2022, Garantex developed infrastructure meant to stop monetary establishments from attributing cryptocurrency pockets addresses again to the alternate, in an try and insulate itself and its clients from sanctions.  This has allowed the alternate to proceed to custody funds and supply different companies to entities and people concerned in illicit actions.  

For instance, Garantex has obtained hundreds of thousands of {dollars} in cryptocurrency immediately from the proceeds of varied Russia-linked ransomware assaults, together with these involving the Conti, Black Basta, LockBit, NetWalker, and Phoenix Cryptolocker ransomware variants.  Garantex has additionally offered account and alternate companies to actors related to the Ryuk ransomware gang.  Ekaterina Zhdanova, a prolific cash launderer, exchanged over $2 million in Bitcoin for Tether (USDT) through Garantex.  OFAC beforehand designated Ekaterina Zhdanova on November 3, 2023, pursuant to E.O. 14024 for working or having operated within the monetary companies sector of the Russian Federation financial system.  

OFAC is designating Garantex pursuant to E.O. 13694, as additional amended, for having materially assisted, sponsored, or offered monetary, materials, or technological help for, or items or companies to or in help of, cyber-enabled actions originating from, or directed by individuals situated, in entire or substantial half, exterior the United States which are moderately more likely to end in, or have materially contributed to, a risk to the nationwide safety, overseas coverage, or financial well being or monetary stability of the United States and which have the aim of or contain inflicting a misappropriation of funds or financial sources, mental property, proprietary or enterprise confidential info, private identifiers, or monetary info for business or aggressive benefit or personal monetary achieve.

GRINEX WAS CREATED TO AVIOD SANCTIONS PLACED ON GARANTEX

OFAC is designating Grinex, one other cryptocurrency alternate created by Garantex workers to help the corporate’s sanctions evasion efforts.  Immediately following the March 6, 2025 legislation enforcement actions led by the U.S. Secret Service, Garantex officers created the infrastructure to proceed to offer key companies to Garantex, particularly transferring Garantex buyer deposits to Grinex.  Grinex’s promotional supplies state that the alternate was shaped in response to sanctions and asset freezes that affected Garantex.  Since its creation, Grinex has facilitated the switch of billions of {dollars} in cryptocurrency transactions.  OFAC is designating Grinex pursuant to E.O. 13694, as additional amended, for being owned or managed by, or having acted or presupposed to act for or on behalf of, immediately or not directly, Garantex, an individual whose property and pursuits in property are blocked pursuant to E.O. 13694, as additional amended.

Garantex carried out this scheme to maneuver its funds to Grinex and permit its clients who misplaced their funds following the legislation enforcement disruptions to regain entry to their accounts utilizing the A7A5 token, a ruble-backed digital asset.  The A7A5 token is issued by Kyrgyzstani agency Old Vector.  Old Vector labored with Garantex and others within the creation of the A7A5 token.  Garantex customers who misplaced income had been offered the equal of their losses within the A7A5 token.  The token was created for Russian clients of A7 Limited Liability Company (A7), a Russian agency that gives cross-border settlement platforms used for sanctions evasion.  A7 and its subsidiaries A71 Limited Liability Company (A71) and A7 Agent Limited Liability Company (A7 Agent) are owned by sanctioned Moldovan oligarch Ilan Mironovich Shor (Shor) and sanctioned Russian financial institution Promsvyazbank Public Joint Stock Company (PSB).  Prior to the March 6, 2025 legislation enforcement actions, representatives for Shor met with Garantex officers to determine A7A5 buying and selling on Garantex.

OFAC is designating A7 pursuant to E.O. 13694, as additional amended, for having materially assisted, sponsored, or offered monetary, materials, or technological help for, or items and companies to or in help of, Garantex, an individual whose property and pursuits in property are blocked pursuant to E.O. 13694, as additional amended.  OFAC can also be designating A71 and A7 Agent pursuant to E.O. 13694, as additional amended, for being owned or managed by, or having acted or presupposed to act for or on behalf of, immediately or not directly, A7, an individual whose property and pursuits in property are blocked pursuant to E.O. 13694, as additional amended.  Further, OFAC is designating Old Vector pursuant to E.O. 13694, as additional amended, for having materially assisted, sponsored, or offered monetary, materials, or technological help for, or items and companies to or in help of, A7, an individual whose property and pursuits in property are blocked pursuant to E.O. 13694, as additional amended.

KEY GARANTEX PERSONNEL AND PARTNER ENTITIES 

Garantex’s senior executives have supported its capability to allow cybercrime and sanctions evasion by procuring laptop infrastructure for Garantex, registering its emblems, and interesting in enterprise growth efforts to make its actions seem authentic.  Garantex’s community of associate corporations has additionally enabled it to maneuver cash, together with illicit funds, exterior of Russia.

Sergey Mendeleev (Mendeleev)is a co-founder of Garantex, Aleksandr Mira Serda (Mira Serda) is a co-owner and the chief business officer of Garantex, and Pavel Karavatsky (Karavatsky)is a co-owner and regional director of Garantex.  

Independent Decentralized Finance Smartbank and Ecosystem (InDeFi Bank) and Exved had been co-founded and are managed by Mendeleev.  InDeFi Bank offers decentralized monetary companies exterior of conventional finance purposes, together with serving to customers to buy digital currencies from Garantex.  Exved is a fee platform that works carefully with InDeFi Bank to facilitate cryptocurrency-mediated commerce between Russia and different international locations to subvert U.S. sanctions on Russia’s monetary companies sector.

OFAC is designating Mendeleev, Mira Serda, and Karavatsky pursuant to E.O. 13694, as additional amended, for being owned or managed by, or having acted or presupposed to act for or on behalf of, immediately or not directly, Garantex, an individual whose property and pursuits in property are blocked pursuant to E.O. 13694, as additional amended.  OFAC is designating InDeFi Bank and Exved pursuant to E.O. 13694, as additional amended, for being owned or managed by, or having acted or presupposed to act for or on behalf of, immediately or not directly, Mendeleev, an individual whose property and pursuits in property are blocked pursuant to E.O. 13694, as additional amended. 

SANCTIONS IMPLICATIONS

As a results of at present’s motion, all property and pursuits in property of the blocked individuals described above which are within the United States or within the possession or management of U.S. individuals are blocked and should be reported to OFAC.  In addition, any entities which are owned, immediately or not directly, individually or within the mixture, 50 p.c or extra by a number of blocked individuals are additionally blocked.  Unless approved by a basic or particular license issued by OFAC, or exempt, OFAC’s laws typically prohibit all transactions by U.S. individuals or inside (or transiting) the United States that contain any property or pursuits in property of designated or in any other case blocked individuals. 

In addition, monetary establishments and different individuals that interact in sure transactions or actions with the sanctioned entities and people could expose themselves to sanctions or be topic to an enforcement motion.  The prohibitions embrace the making of any contribution or provision of funds, items, or companies by, to, or for the advantage of any designated particular person, or the receipt of any contribution or provision of funds, items, or companies from any such particular person. 

Violations of OFAC laws could end in civil or prison penalties. OFAC’s Economic Sanctions Enforcement Guidelines present extra info concerning OFAC’s enforcement of U.S. sanctions, together with the components that OFAC typically considers when figuring out an acceptable response to an obvious violation.

The energy and integrity of OFAC sanctions derive not solely from OFAC’s capability to designate and add individuals to the SDN List, but in addition from its willingness to take away individuals from the SDN List in line with the legislation.  The final objective of sanctions is to not punish, however to deliver a couple of optimistic change in conduct.  For info in regards to the course of for searching for elimination from an OFAC checklist, together with the SDN List, please confer with OFAC’s Frequently Asked Question 897 right here.  For detailed info on the method to submit a request for elimination from an OFAC sanctions checklist, please click on right here.

Click here for more information on the individuals and entities designated or otherwise blocked today.

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