Tether Freezes $28 Million USDT on Garantex Exchange

Big news out of Russia’s crypto space: Garantex exchange, a local exchange already facing US sanctions, is accusing Tether of making a move against their market. 

Garantex dropped the bombshell on Telegram, announcing that Tether had frozen a bunch of USDT wallets on their platform – we’re talking over $28 million worth!

Uh Oh: Russian USDT Holders Could Be in Trouble

Garantex isn’t mincing words, warning that this freeze means USDT stablecoins held in user wallets are now at risk. Several user accounts with USDT funds have been affected. To get a handle on things, Garantex has hit pause on all operations for now.

Sergey Mendeleev, Garantex’s co-founder, chimed in, pointing out that this action throws a wrench into Russia’s international trade, which increasingly relies on digital assets.

“We’re temporarily shutting down all services, including crypto withdrawals, while the whole team works on figuring this out. We’re fighting this and not giving up!” Garantex declared on Telegram.

Mendeleev further cautioned that this freeze is a major headache for businesses and financial players who depend on crypto to handle payments across borders.

Let’s remember, just last December, Russia’s Finance Minister confirmed they’ve been leaning more and more on Bitcoin and other cryptos for international deals, especially with all the sanctions in place.

“We were told things would ease up, sanctions would relax, but we got played again. The game changed suddenly: before, sanctions were just something mentioned, now they’re blocking funds without any trial or investigation. This is exactly what I’ve been warning about for years, but nobody at the Central Bank or in the industry was listening,” Mendeleev lamented.

Mendeleev emphasized that this disruption has wider implications for Russia’s global economic dealings. With Western sanctions squeezing traditional finance, digital currencies have become crucial for international settlements. This latest incident just throws another spanner in the works.

Garantex’s accusation shines a spotlight on the growing pressure from regulators and the escalating tension between US authorities and crypto businesses operating within Russian jurisdiction.

Why is Garantex Under Sanctions?

Anton Gorelkin, a member of Russia’s State Duma, weighed in on the situation. He suggested that Tether’s move is part of a bigger pattern: Western regulators turning up the heat on crypto infrastructure amidst ongoing sanctions.

Gorelkin pointed out that centralized stablecoins like USDT are particularly vulnerable to outside control. Despite this setback, he remained optimistic that the Russian crypto market can’t be completely shut down.

Garantex first ran into regulatory roadblocks back in April 2022. The US slapped sanctions on them as the conflict between Russia and Ukraine intensified.

US officials accused the exchange of not doing enough to prevent money laundering and terrorism financing. They alleged Garantex was used to wash over $100 million linked to hacker groups and shady dealings on the dark web.

In March of last year, law enforcement from the US and UK launched a probe into Garantex, digging into crypto transactions totaling over $20 billion in USDT.

This investigation really highlights the ongoing friction between regulators and crypto players in countries facing sanctions.