Garantex Cryptocurrency Exchange Disrupted in International Operation

The US DoJ, in coordination with authorities in Germany and Finland, has taken decisive action against Garantex, a cryptocurrency exchange accused of facilitating money laundering for transnational criminal organisations, including terrorist groups and sanctioned entities. Since April 2019, Garantex has processed at least $96 billion in cryptocurrency transactions, a substantial portion of which is believed to be linked to criminal activities such as ransomware, hacking, drug trafficking and terrorism financing. The coordinated effort has resulted in the seizure of Garantex’s online infrastructure and the indictment of two key individuals responsible for its operations.

Key Individuals Indicted for Financial Crimes

Aleksej Besciokov, a Lithuanian national and Russian resident, and Aleksandr Mira Serda, a Russian national residing in the United Arab Emirates, have been charged with conspiracy to commit money laundering. Besciokov faces additional charges for conspiracy to violate sanctions and for operating an unlicensed money transmitting business. According to court documents, Besciokov served as the primary technical administrator for Garantex, overseeing its infrastructure, approving transactions and maintaining critical operational systems. Mira Serda, who co-founded the exchange, acted as its chief commercial officer and played a leading role in facilitating its business operations. Prosecutors allege that both individuals knowingly enabled the laundering of criminal proceeds and actively sought to conceal illicit transactions from regulatory scrutiny.

Sanctions Violations & Evasion Tactics

Despite being sanctioned by the US Treasury’s Office of Foreign Assets Control (OFAC) in April 2022 for its involvement in laundering funds from ransomware groups and darknet markets, Garantex continued to operate in violation of sanctions laws. Instead of ceasing its illicit activities, the exchange redesigned its operations to circumvent restrictions and deceive US businesses into unwittingly processing transactions with the platform. In an effort to evade detection, Garantex administrators allegedly moved operational cryptocurrency wallets to different virtual currency addresses daily, making it more difficult for financial institutions to block transactions associated with the exchange.

Seizure of Domains, Servers & Criminal Proceeds

As part of the enforcement action, US authorities seized three domain names associated with Garantex, ensuring that the platform can no longer be used to facilitate money laundering and other financial crimes. Visitors to Garantex’s websites are now met with a law enforcement notice confirming the sites have been taken down. In a further blow to the exchange’s ability to operate, law enforcement agencies in Germany and Finland seized servers that were critical to Garantex’s infrastructure. Additionally, US authorities have frozen over $26 million in assets linked to the exchange’s illicit financial activities.

Global Cooperation in Crypto Crime Enforcement

The US DoJ has highlighted the importance of international cooperation in disrupting financial crime facilitated by cryptocurrency platforms. Law enforcement agencies from Germany, Finland, the Netherlands and Estonia played a critical role in assisting with the investigation. In addition to government-led enforcement efforts, the case also underscores the growing involvement of the private sector in combating financial crime within the cryptocurrency industry. The US DoJ acknowledged the support of blockchain analytics firm Elliptic and stablecoin issuer Tether, both of which provided valuable assistance in tracing illicit transactions.

Implications for Cryptocurrency Exchanges

The prosecution of Garantex’s operators signals a clear warning to cryptocurrency exchanges that fail to implement robust anti-money laundering controls. Regulatory authorities are intensifying their focus on platforms that enable illicit financial flows, and exchanges that operate without proper oversight face severe legal consequences. To mitigate the risk of enforcement action, cryptocurrency businesses must ensure compliance with financial regulations, register with appropriate authorities and implement effective measures to detect and prevent money laundering. The dismantling of Garantex is a significant step in the global effort to combat financial crime in the digital asset space and serves as a reminder that cryptocurrency exchanges cannot operate outside the bounds of the law.

View the indictment here.

Read the press release here.