Tether Freezes $27M in USDT Linked to Garantex Exchange

Tether, a major stablecoin issuer, froze $27 million in USDT linked to Garantex on March 6. The action was part of a coordinated effort involving the U.S.

Tether, a major issuer of the USDT stablecoin, froze $27 million in USDT on March 6 as part of a broader action by the U.S. Department of Justice, and cooperating authorities in Germany and Finland, to shut down Garantex, a Russian crypto exchange.

The action comes as U.S. officials said Garantex had facilitated more than $96 billion in illicit transactions since its founding in 2019. The exchange, which was already subject to U.S. sanctions since 2022 for money laundering, was forced to halt operations, including user withdrawals.

However, a blockchain analytics firm in Switzerland reported that Garantex has re-emerged under a new name, with funds laundered in ruble-backed stablecoins being moved from one platform to another.

The development has brought attention to how stablecoins are being used for cross-border transactions by Russia amid a crackdown by Western nations.

Stablecoins, like Tether’s USDT, have become increasingly popular in Russia as companies face difficulties accessing global financial systems due to imposed sanctions. While the Central Bank of Russia remains opposed to cryptocurrency use within the domestic economy, the country’s senior officials have discussed testing crypto-based payments for international transactions in an experimental legal framework.

These trials, which began in 2022, aim to allow companies to circumvent the sanctions that have drastically limited Russia’s access to global financial institutions.

The government is now considering new regulatory reforms, including amendments to the criminal procedure code that would formally recognize digital assets as property. In addition, Evgeny Masharov of the Russian Civic Chamber proposed creating a state-run crypto fund composed of digital assets seized in criminal cases.

Russian officials see these developments as presenting both challenges and opportunities. The freezing of Garantex-linked assets has heightened the urgency of discussions to build Russia’s own domestic tools for digital finance that can operate without interference from foreign institutions.