Tether Blocks $28M USDT on Russian Exchange Garantex Amid Sanctions

Garantex Halts Operations Amid Tether’s Freeze

On March 6, Garantex announced via Telegram that it had suspended all services, including cryptocurrency withdrawals. The exchange blamed Tether for this decision, stating, "Tether has entered the war against the Russian crypto market." The message warned users that all USDT held in Russian-linked wallets could now be at risk.

This sudden shutdown has sent shockwaves through Russia’s digital asset industry, as Garantex was one of the few remaining platforms providing liquidity to Russian traders amid global financial restrictions.

Sanctions and Regulatory Crackdown

The freeze follows the European Union’s decision on February 24, 2025, to include Garantex in its latest round of sanctions against Russia. The EU accused the exchange of facilitating financial transactions for sanctioned Russian banks and helping users bypass financial restrictions. This aligns with previous actions taken by the U.S. Treasury, which sanctioned Garantex in 2022 for allegedly enabling cybercriminals and ransomware operators to launder money.

Despite these sanctions, Garantex had continued to operate, reportedly playing a key role in helping Russian businesses and individuals move money in and out of the country. However, Tether’s decision to freeze funds directly impacts the platform’s ability to function, cutting off one of the most widely used stablecoins in the Russian crypto ecosystem.

Tether’s Role in Enforcing Sanctions

Tether’s move to freeze USDT holdings on Garantex underscores the growing role of stablecoin issuers in global financial compliance. USDT, pegged to the U.S. dollar, is widely used for crypto transactions, and its accessibility has made it a favored tool for bypassing traditional banking restrictions.

By freezing these funds, Tether is demonstrating its willingness to cooperate with international regulators, even as it faces ongoing scrutiny over its compliance practices. This action also signals that cryptocurrency platforms can no longer operate in isolation from global financial regulations.

Impact on Russia’s Crypto Market

The freezing of assets and the shutdown of Garantex highlight the increasing challenges facing Russia’s crypto market. Since being cut off from the SWIFT global banking system, many Russians have turned to cryptocurrency as an alternative means of financial transactions. The Russian central bank had even allowed certain businesses to use crypto for cross-border payments to circumvent Western sanctions.

However, the move against Garantex shows that even crypto is not immune to regulatory pressure. Russian lawmaker Anton Gorelkin acknowledged the difficulties, stating that while crypto has been a useful tool for bypassing sanctions, USDT can no longer be relied upon in this regard.

U.S. Law Enforcement’s Involvement

In addition to Tether’s freeze, U.S. law enforcement agencies, including the Secret Service, have taken further steps by seizing Garantex’s web infrastructure. This is part of a broader effort to dismantle platforms accused of facilitating cybercrime, including ransomware payments and darknet transactions.

The crackdown is part of a wider international effort to curb illicit financial flows in the crypto space. With the seizure of Garantex’s infrastructure, Russian cybercriminals and sanctioned entities now face even greater obstacles in accessing global financial networks.

A New Era of Crypto Regulation?

The freezing of $28 million in USDT on Garantex marks a turning point in crypto regulation. Stablecoin issuers and exchanges are under increasing pressure to comply with international sanctions, and governments are taking stronger action to enforce compliance.

For Russian crypto users, this event is a stark reminder that digital assets are no longer a guaranteed way to bypass restrictions. As enforcement tightens, the global crypto industry is entering a new phase where regulatory oversight and financial transparency are becoming unavoidable.