US and UK authorities have launched an investigation into over $20 bln of USDT transfers that passed through the Russian exchange Garantex. Given that Tether’s capitalization exceeds $100 bln, up to one fifth of all coins in circulation could pass through Garantex. What are the implications of this investigation? Will monitoring control over the deposit addresses of Garantex users and counterparties be strengthened? And what role will the Garantex exchange play after the sanctions?
The United States and United Kingdom have launched an investigation into over $20 bln of cryptocurrencies that passed through Garantex, a sanctioned Russia-based crypto exchange, and Tether is at the center of the probe, a new report revealed.
This investigation by US and UK authorities into transactions amounting to over $20 bln in Tether through Garantex could indeed have serious consequences. At issue is a possible large-scale breach of the sanctions regime against Russia.
If the investigation confirms that a significant amount of cryptocurrency was used to circumvent sanctions, this will inevitably lead to tightened control over the cryptosphere by regulators. Authorities could strengthen the oversight of platforms that issue and circulate stablecoins, tighten requirements for compliance with regulations, and carry out more thorough verification of counterparties.
Garantex commented on the investigation and disputes the $20 bln allegation, suggesting that this is the result of erroneous benchmarking of wallets by analysts. The exchange representative also noted that their procedures for combating money laundering and terrorist financing comply with Russian legislation and international standards.
There is a risk that, due to sanctions, the use of the USDT stablecoin may become problematic for Russian users, as was previously the case for some foreign exchanges.
The situation is not so clear-cut. Garantex disputes the scope of the alleged violations and cites compliance. There was also criticism of the sanctions and their possible negative impact on Russian cryptocurrency users.
Overall, comments from Garantex and experts add more color to this story and point to the potentially serious consequences for the industry from unilateral restrictive measures. The new investigation demonstrates the authorities’ wary attitude towards the cryptosphere and the desire to prevent it from being used to circumvent the sanctions.