The coordinated action between U.S., German, and Finnish authorities against Garantex cryptocurrency exchange has sent shockwaves across the global financial system. Garantex, a cryptocurrency exchange accused of facilitating a significant amount of illicit transactions, has been disrupted in a global operation led by the U.S. Department of Justice (DOJ). The exchange allegedly played a central role in supporting international money laundering activities linked to transnational criminal organizations, including terrorist groups, and violating sanctions regulations. The operation signifies a powerful strike against cryptocurrency exchanges used to conceal illegal financial activities.

The Rise and Fall of Garantex Cryptocurrency Exchange

Launched in 2019, Garantex quickly gained notoriety within the cryptocurrency space. Although initially operating as a legitimate exchange, it soon became a hub for illicit financial transactions. The exchange processed at least $96 billion in cryptocurrency transactions since its inception. What began as a platform for cryptocurrency trading soon became a vehicle for laundering money tied to organized crime, terrorism, and hacking. This vast network of criminal activity made it a prime target for international law enforcement agencies.

Garantex had created an infrastructure designed to operate in a way that shielded its illicit dealings from regulatory scrutiny. The platform’s administrators employed several techniques to circumvent the laws designed to prevent money laundering. Despite its rapid expansion, the exchange’s connection to criminal activity did not go unnoticed for long. In 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Garantex for its role in facilitating illegal financial activity, including ransomware attacks and money laundering for darknet markets.

However, this was just the beginning. Authorities across the globe, including in the U.S., Finland, and Germany, worked together to take down Garantex’s operations and hold its key players accountable for their role in supporting illicit financial systems.

The Key Players Behind Garantex’s Illicit Operations

Aleksej Besciokov and Aleksandr Mira Serda are the central figures implicated in Garantex’s operation. According to court documents, Besciokov, 46, a Lithuanian national residing in Russia, served as the primary technical administrator for the exchange. Besciokov was responsible for managing the exchange’s infrastructure, approving transactions, and ensuring the platform’s technical capabilities remained hidden from the prying eyes of law enforcement.

Mira Serda, 40, a Russian national who lived in the United Arab Emirates, co-founded Garantex and served as its chief commercial officer. His role was crucial in driving the platform’s business strategy, overseeing the commercial transactions that helped the exchange facilitate illicit activities. Both individuals were aware of the illegal activities taking place on Garantex, but they took deliberate actions to conceal their involvement. For example, when Russian law enforcement sought records tied to one of Mira Serda’s accounts, the exchange deliberately withheld information or provided false data in an attempt to mislead authorities.

The indictment unsealed in the Eastern District of Virginia charges Besciokov and Mira Serda with conspiracy to commit money laundering, violating sanctions, and operating an unlicensed money transmitting business. Besciokov also faces additional charges related to conspiracy to violate the International Emergency Economic Powers Act.

Garantex’s Role in Facilitating Crime

Garantex was not merely a platform for crypto trading; it was an active participant in a global network of criminal activity. According to the indictment, the exchange was used to facilitate a wide range of illegal operations, including drug trafficking, hacking, and ransomware. The funds laundered through Garantex were tied to some of the most damaging cyberattacks and terrorist financing schemes of recent years.

Ransomware attacks, in which hackers demand payment in cryptocurrencies to release control over victims’ data, became a particularly lucrative criminal activity for Garantex. The exchange allowed cybercriminals to convert their illicit gains into cryptocurrency and move the funds across borders, making it difficult for authorities to trace.

Furthermore, Garantex was implicated in assisting terrorist organizations by laundering funds used for nefarious purposes. While some of this activity was covert, the scale of the operations and the sheer volume of transactions suggest that Garantex was a key player in facilitating global terrorism financing.

Sanctions Violations and the Continued Operation of Garantex

In April 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) took the decisive step of sanctioning Garantex for its direct involvement in laundering funds for ransomware criminals and darknet markets. The sanctions made it illegal for U.S.-based individuals and entities to transact with Garantex or use its platform for any financial activity.

Despite this sanction, Garantex continued to operate. The administrators, including Besciokov and Serda, actively circumvented the sanctions by engaging in evasive strategies. Garantex moved its cryptocurrency wallets to different virtual addresses daily, making it harder for U.S.-based exchanges and authorities to track illicit transactions. In addition, Besciokov and his co-conspirators took steps to encourage U.S.-based businesses to unwittingly conduct transactions with Garantex, thus violating the sanctions.

This failure to comply with U.S. sanctions directly led to the current investigation and disruption of the exchange’s operations.

The Seizure of Garantex’s Online Infrastructure

As part of the operation to dismantle Garantex, U.S. law enforcement executed a seizure order for three of Garantex’s critical domains: Garantex.org, Garantex.io, and Garantex.academy. This seizure, authorized by a judge in the Eastern District of Virginia, effectively shuts down Garantex’s online infrastructure and blocks access to its illicit services. Visitors to these domains now see a seizure message from law enforcement agencies, which includes logos from the DOJ, U.S. Secret Service, FBI, and other foreign law enforcement entities.

In addition to the domain seizure, law enforcement agencies from Germany and Finland seized servers that were critical to Garantex’s operations. These servers contained valuable data, including customer information and accounting records, which are expected to aid in further investigations into Garantex’s network of criminal activity. The seized funds, totaling more than $26 million, were also frozen as part of the effort to stop the flow of money laundering.

Legal Consequences for the Garantex Administrators

The legal charges brought against Aleksej Besciokov and Aleksandr Mira Serda are severe, carrying the potential for significant prison sentences. Both individuals face up to 20 years in prison for conspiracy to commit money laundering, and Besciokov could face additional time for violating U.S. sanctions and running an unlicensed money transmitting business. The investigation and legal proceedings against them highlight the seriousness with which authorities are addressing the abuse of cryptocurrency exchanges for illicit activities.

Conclusion

The disruption of Garantex marks a major milestone in the global fight against money laundering and the abuse of cryptocurrency exchanges. Through international cooperation and coordinated actions, law enforcement agencies have been able to bring down a major player in the world of illicit finance. As the case against the administrators of Garantex unfolds, it serves as a warning to others in the crypto space that law enforcement will not tolerate the use of digital currencies for criminal activity.

Related Links

• U.S. Department of Justice: Cryptocurrency Seizure Operations
• OFAC Sanctions Cryptocurrency Exchanges
• Europol: Fighting Crypto-related Crime
• FBI Cyber Crime Investigation
• Tether and Blockchain Analytics

Other FinCrime Central News Reports about Crypto Exchanges Being Shut Down

• Shocking Claims: AurumXchange Accused of Laundering Cryptocurrency
• Dutch authorities take down 2 crypto exchanges, seize €7M in money laundering bust
• Germany Shuts Down 47 Crypto Exchanges Over Money Laundering Activities
• Europol’s Landmark Operation Dismantles Crypto Crime Network
• Upbit Ban Shock: Major Setback for Crypto Users in South Korea

Source: US DOJ