Tether, the issuer of the USDT stablecoin, froze approximately $27 million worth of USDT on Garantex, a sanctioned Russian cryptocurrency exchange. This action forced Garantex to suspend all trading and withdrawal services, with the exchange announcing the halt via its official Telegram channel. Garantex stated that Tether had “entered the war against the Russian crypto market” by blocking wallets containing over 2.5 billion rubles (equivalent to $27 million USD at the time), and warned its users that all USDT held in Russian wallets could now be at risk.
The freeze follows heightened international sanctions against Garantex, which was first targeted by the U.S. Treasury’s Office of Foreign Assets Control (OFAC) in April 2022 for facilitating illicit transactions, including those tied to money laundering and darknet markets like Hydra. More recently, on February 26, 2025, the European Union included Garantex in its 16th sanctions package against Russia, citing its links to EU-sanctioned Russian banks and its role in circumventing sanctions related to Russia’s war in Ukraine. This marked the EU’s first direct sanction of a crypto exchange, amplifying pressure on Garantex’s operations.
Sanctions on Russian banks have been a key component of Western efforts to pressure Russia economically, particularly in response to its invasion of Ukraine starting in February 2022. As of March 7, 2025, these sanctions have evolved significantly, targeting Russia’s financial infrastructure to disrupt its war funding and integration with the global economy.
Tether, as a centralized stablecoin issuer, has the ability to freeze USDT in specific wallets when compelled by regulatory or law enforcement directives, a capability it has exercised before (e.g., freezing $1.4 million USDT in a 2024 tech scam case with U.S. authorities). The freeze aligns with Western efforts to restrict Russia’s access to global financial systems, including cryptocurrency markets used to evade sanctions. The U.S. and UK are also investigating Garantex for allegedly processing over $20 billion in USDT transactions since 2022, one of the largest sanctions breaches tied to the Ukraine conflict.
U.S.: The SEC and FinCEN impose strict securities and AML/KYC rules, as seen in Coinbase’s challenges with tokenizing COIN stock. Tether’s compliance with U.S.-led sanctions reflects this stringent oversight, where centralized entities must align with federal directives, unlike Brazil’s more flexible approach.
Russia: While Russia legalized crypto payments for international trade in 2024 and is exploring a state-backed digital ruble, its exchanges like Garantex face external sanctions rather than internal bans. Domestic law doesn’t prohibit crypto holdings, but Western actions like Tether’s freeze exploit centralized points of control (e.g., USDT), disrupting operations.
Garantex’s daily trading volume had surged over 1,000% since 2022—from $11 million to $121.6 million by March 1, 2025—despite sanctions, underscoring its role in Russia’s crypto ecosystem. However, Tether’s action has crippled its liquidity, prompting Russian lawmaker Anton Gorelkin to warn of further Western pressure on centralized stablecoins like USDT. He argued that while Russia’s crypto market can’t be fully blocked, reliance on controllable assets like USDT is a vulnerability.
This freeze may push Russian users toward decentralized alternatives or other stablecoins, though global regulatory scrutiny is narrowing such options. For Tether, it reinforces its commitment to cooperating with law enforcement, as seen in its T3 Financial Crime Unit with TRON and TRM Labs, but also underscores the geopolitical leverage wielded through centralized crypto assets. Garantex vows to fight the freeze, but its future remains uncertain amid escalating sanctions.
