Russian cryptocurrency exchange Garantex recently faced significant challenges, culminating in a turbulent week for the company. The first major blow occurred when Tether, a leading stablecoin issuer, blocked access to Garantex’s wallets containing approximately $28 million. This decision was made public on Thursday, coinciding with an international law enforcement operation led by the U.S. Secret Service, which also resulted in the seizure of Garantex’s official websites. During this time, Garantex did not acknowledge these developments in its communications; instead, it announced a complete suspension of services, including cryptocurrency withdrawals.
Legal Actions Against Garantex Administrators
The situation worsened on Friday when the U.S. Department of Justice charged two administrators of Garantex, Aleksej Besciokov and Aleksandr Mira Serda. They are accused of facilitating money laundering activities for cybercriminals and terrorists. Prosecutors froze over $26 million worth of Tether and Bitcoin associated with these illicit operations, clarifying the previous action taken against Garantex’s wallets.
Customer Engagement Amid Uncertainty
As the fallout continued, Garantex attempted to engage its customers by proposing in-person meetings at its Moscow office, effective from Monday. The exchange urged clients with positive account balances to attend these meetings, stating they must bring the phone linked to their accounts and access to their email for potential confirmation codes. This initiative suggests Garantex has crafted a plan for addressing blocked assets, although it hasn’t publicly addressed the ongoing law enforcement scrutiny.
Customer Risks and Exchange History
The invitation for face-to-face meetings raises concerns, especially given Garantex’s status as a sanctioned entity by both the U.S. government and the European Union, alongside the involvement of Russian authorities. Customers face unpredictable risks attending such meetings, and there remains no assurance of receiving refunds from the exchange. The number of customers impacted by Garantex’s challenges is uncertain, but the exchange has facilitated over $96 billion in cryptocurrency transactions since its inception in 2019, indicating a potentially large clientele, many of whom may not reside near Moscow.
As of now, Garantex has not responded to requests for further comments on the situation.