Garantex’s multi-million ghost crypto wallets remain active even after sanctions

More proof has emerged, highlighting today's challenges of sanctioning and stopping illicit crypto platforms.

Global Ledger, a provider of anti-money laundering solutions and blockchain visualizations, said it has found that despite authorities having frozen around $26 million in the tether (USDT) stablecoin belonging to Russian crypto exchange Garantex, the platform still operates at least $15 million in crypto assets that are "beyond immediate enforcement."

Garantex was sanctioned by the US Office of Foreign Assets Control (OFAC) in April 2022, and $26 million in USDT was frozen this March.

Global Ledger's research has shown the platform still operates assets across bitcoin (BTC), ethereum (ETH), and BNB Chain (BNB) blockchains. For example, a Garantex-attributed ETH wallet was active again in March, when it aggregated over 3,200 ETH ($7.8 million), before sending $2.25 million worth of ETH to Tornado Cash, a crypto mixer that helps obfuscate transaction history.

Additionally, 2.2 BTC ($226,000) was moved to the TRON network and partially transferred to Grinex. (As reported by Cybernews.com, Grinex emerged as the successor of the sanctioned Russian platform, as, in March, Grinex started to onboard Garantex's clients and was considering hiring its former employees.)

According to the researchers, Garantex has 30 BTC ($3 million), and these funds have begun consolidating from multiple historical addresses that remained unspent for a couple of years. Another $4 million worth of tokens was found on the BNB Chain.

Therefore, while freezing centralized stablecoins such as USDT or USD Coin (USDC) has now become a usual practice, more decentralized services are still a bigger challenge to law enforcement.

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"Garantex’s on-chain manoeuvring underscores the growing challenge of enforcing asset freezes in a multi-chain environment, where assets move across protocols and ecosystems no longer easily governed by traditional mechanisms," said Global Ledger.

For example, in their Telegram channel, Garantex said that this month, they'll announce an unspecified solution for their BTC and ETH customers.

Also, according to the research findings, all these manoeuvres "strongly suggest an intentional money laundering effort to obscure links to Garantex."