Latest Seizure and Charges Announced Against Russian-Based Exchange
As we have previously covered, despite headlines that the federal government is softening it’s position on cryptocurrency and lessening enforcement, it still appears focused on the cryptocurrency industry. Last week, the Department of Justice announced that it had seized the Russian based cryptocurrency exchange website Garantax, and it unsealed money laundering charges against the heads of the website, Aleksej Besciokov and Aleksandr Mira Serda. According to the press release announcing the charges, investigators in the United States worked with European law enforcement agencies to build their case against the exchange which have reportedly processed $96 billion in cryptocurrency transactions since April 2019, which culminated in the seizure of the various domains associated with the exchange in the United States and elsewhere, as well as freezing over $26 million in funds the government alleges was used to facilitate their money laundering activities.
According to the indictment, the two individuals charged, “operated Garantex to launder the proceeds of criminal activity, including ransomware, computer hacking, narcotics transactions, and sanctions violations, and profited from the laundering. Garantex offered its services to the public first through the website Garantex.io and then through Garantex.org. Garantex also misled law enforcement, including the Russian police, about the identities of its customers.” The indictment alleges that although the charged individuals knew that accounts and/or crypto transactions that were affiliated with drug dealers, North Korean hackers, terrorist financing and various other illegal financing operations, they processed them in violation of the law. Many individuals were allowed to transact on the website without providing any identification about who was behind the accounts, including shielding Mira Serda’s own account and identification from Russian authorities. Despite the company being under sanction since 2022, Besciokov and others in the company “redesigned Garantex’s operations to evade and violate U.S. sanctions and induce U.S. businesses to unwittingly transact with Garantex in violation of the sanctions.” As a result of this accused conduct, Besciokov and Mira Serda are each charged with one count of conspiracy to commit money laundering, while Besciokov is also charged with one count of conspiracy to violate the International Emergency Economic Powers Act, and with conspiracy to operate an unlicensed money transmitting business. This is just the latest example of the federal government trying to rein in those who utilize cryptocurrency transactions to further illegal business. Expect more charges and seizures to follow as law enforcement continues to analyze the various blockchains and hold those who use them illegally accountable.
