Analysis of Garantex, Russia’s Largest Sanctioned Crypto Exchange
The recent European Union sanctions against Garantex, Russia’s largest cryptocurrency exchange, have brought attention to the exchange’s controversial operations. Despite being sanctioned by the U.S. in 2022, Garantex has continued to operate successfully, with analysts noting that its “intelligence value far outweighs the desire to prosecute” due to its ties to the Russian government.
Background and Operations
Garantex was co-founded in 2019 by Russian tech expert Stanislav Drugalev and former KGB officer Sergey Mendeleev. The exchange offers deposits and withdrawals of cash rubles to Russian bank cards, including Sberbank, Tinkoff, and Alfa-Bank. According to Chainalysis, a U.S.-based blockchain intelligence firm, Garantex has facilitated payments linked to ransomware gangs and darknet markets, including the notorious Hydra marketplace, which was shut down in April 2022.
Sanctions and International Pressure
The European Council’s 16th sanctions package, introduced on February 24, 2025, added Garantex to the list of sanctioned entities due to its “close association with EU-sanctioned Russian banks.” This move is seen as symbolic of the EU’s efforts to maintain economic pressure on Russian financial services and cryptocurrency exchanges. However, analysts believe that the sanctions will not have a major impact on Garantex’s overall operations, as the exchange has already been operating under U.S. sanctions for years.
Trust and Loyalty in the Russian Cryptocurrency Ecosystem
Andrew Fierman, head of national security intelligence at Chainalysis, notes that trust plays a significant role in the Russian cryptocurrency ecosystem. Garantex has established itself as a trusted platform within Russia, with stable liquidity reserves, making it unlikely that users will move away from the platform despite the latest sanctions. This loyalty is also attributed to the exchange’s apparent backing from the Kremlin, with investigations uncovering links between Garantex affiliates and the Russian government.
Concerns and Implications
The ongoing operation of Garantex under Kremlin oversight raises concerns about international security and the global crypto market. Analysts warn that the exchange’s deep ties to the Russian government and questionable actors threaten the integrity of the cryptocurrency ecosystem. Isabella Chase, head of policy for the UK and EU at TRM Labs, notes that Garantex continues to process “billions in transactions annually, allowing cybercriminals and sanctioned entities to launder illicit funds with minimal oversight.”
Key Statistics and Findings
- Garantex has facilitated payments linked to ransomware gangs and darknet markets, including the notorious Hydra marketplace.
- The exchange has been sanctioned by the U.S. since 2022 and has recently been added to the EU’s sanctions list.
- Garantex processes billions in transactions annually, with over 85% of inflows to sanctioned entities and jurisdictions.
- The exchange has established itself as a trusted platform within Russia, with stable liquidity reserves and apparent backing from the Kremlin.
Predictions and Future Outlook
Based on the analysis, it is likely that Garantex will continue to operate despite international sanctions. The exchange’s trustworthiness and loyalty within the Russian cryptocurrency ecosystem, combined with its apparent backing from the Kremlin, make it unlikely that users will move away from the platform. However, the ongoing operation of Garantex under Kremlin oversight poses significant risks to international security and the global crypto market.
Potential Consequences
- Increased regulatory scrutiny and enforcement efforts may lead to a decline in Garantex’s operations, but this is unlikely to happen in the near future.
- The exchange’s continued operation may lead to further sanctions and international pressure, potentially affecting the broader Russian cryptocurrency ecosystem.
- The use of Garantex by cybercriminals and sanctioned entities may continue to pose a threat to the integrity of the cryptocurrency ecosystem, highlighting the need for stronger international cooperation and enforcement.
Recommendations
- International regulatory bodies and law enforcement agencies should prioritize cooperation and enforcement efforts to combat the use of Garantex and other sanctioned exchanges for illicit activities.
- Cryptocurrency exchanges and service providers should prioritize know-your-customer (KYC) and anti-money laundering (AML) protocols to prevent the facilitation of illicit transactions.
- The global cryptocurrency community should remain vigilant and aware of the risks associated with Garantex and other sanctioned exchanges, taking steps to protect themselves and the integrity of the ecosystem.
