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Jimmy Aki
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Jimmy Aki
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Key Takeaways:
- Garantex exchange announced that Tether froze $27 million in USDT from its wallets.
- The trading platform also halted all trading services, including cryptocurrency withdrawals.
- The latest freeze action aligns with recent EU and OFAC sanctions targeting Russian financial entities evading restrictions.
- Despite enforcing USDT freezes on illicit transactions, Tether remains non-compliant with the EU’s MiCA regulations.
On March 6, Russian crypto exchange Garantex reported that stablecoin giant Tether had frozen access to its wallets holding over 2.5 billion rubles ($27 million) in USDT. The platform warned Russian users that their USDT holdings could also be at risk, as Tether’s freezes may continue targeting funds linked to sanctioned entities.
This latest block comes after the U.S. Treasury sanctioned the Garantex exchange in 2022, accusing it of facilitating over $100 million in illegal transactions.
Garantex Exchange Temporarily Suspends Services
According to an announcement on its Telegram channel, the Garantex exchange has temporarily suspended all trading services, including cryptocurrency withdrawals.
The platform’s team is actively working to resolve the issue, but no timeline has been provided for when services might resume or how the matter will be addressed.
Tether has not yet released an official statement regarding the frozen Garantex exchange wallets. However, financial experts believe the freeze is directly linked to recent international sanctions and violations.
EU and U.S. Crack Down on Garantex Exchange Over Sanctions Evasion
Early last month, the EU introduced its 16th package of sanctions in response to Russia’s ongoing war against Ukraine. As part of these measures, the Garantex exchange was sanctioned due to its close financial ties to Russian banks already under EU restrictions.
Authorities accused the platform of facilitating transactions that helped Russia circumvent financial sanctions, enabling sanctioned entities to move funds despite international restrictions.
This marked a major moment in regulatory history, as it was the first time the EU sanctioned a cryptocurrency exchange.
The recent action against the Garantex exchange mirrors a similar crackdown by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) in April 2022.
According to OFAC investigations, over $100 million in Garantex transactions were linked to illicit activities, including nearly $6 million from the Russian ransomware group Conti and approximately $2.6 million from Hydra, a now-defunct Russian darknet marketplace.
To put these developments into a deeper context, a 2024 report by Chainalysis highlighted how Russia and Iran have been leveraging decentralized finance (DeFi) platforms and no-KYC exchanges to sustain financial operations despite international sanctions.
The report estimated that sanctioned entities in both countries received $15.8 billion in cryptocurrency throughout the year, making up nearly 39% of all illicit crypto transactions.
The latest EU restrictions and the Tether freeze on Garantex exchange wallets are expected to further cut Russia’s access to Western banking systems, cryptocurrencies, and other financial tools.
Tether Freezes: A Recurring Pattern in Crypto Crime Crackdowns
Tether freezes are not uncommon, and the action against the Garantex exchange is part of a larger pattern.
In November 2023, Tether froze $225 million in USDT in collaboration with OKX, targeting a human trafficking ring in Southeast Asia running a global pig butchering scam.
The freeze was carried out at the request of the U.S. Secret Service and marked the largest seizure of Tether’s USDT to date.
More recently, in February 2025, Tether froze approximately $46 million USDT by blocking 11 TRON addresses and seven Ethereum addresses associated with illicit activities.
In the same month, another 181,000 USDT was frozen due to its links to the ByBit hack, which resulted in losses of $1.46 billion.
Regulatory Scrutiny on Tether’s USDT and Its Compliance Challenges
Despite these enforcement actions, Tether has faced criticism over its transparency and regulatory compliance. The company has been under scrutiny for not fully disclosing the composition of its reserves, raising concerns about the stability of Tether’s USDT.
Additionally, it has encountered compliance challenges with the European Union’s Markets in Crypto-Assets (MiCA) regulations, which require major stablecoin issuers to hold at least 60% of their reserves in bank deposits.
Tether’s CEO, Paolo Ardoino, has opposed this requirement, arguing that it could expose stablecoin issuers to increased financial risks.
As the situation unfolds, users of the Garantex exchange remain in limbo, awaiting further updates on whether Tether freezes will continue and whether the exchange can resolve the issue.
Frequently Asked Questions (FAQs)
Tether freezes wallets based on law enforcement requests, regulatory actions, or suspected illicit activity. While the company has not fully disclosed its internal decision-making process, past freezes suggest it closely collaborates with U.S. and global regulators.
Once USDT is frozen, recovery depends on whether Tether receives clearance from authorities or finds sufficient justification to release the funds. In most cases, frozen assets linked to sanction violations remain inaccessible indefinitely.
While Tether is the most active in enforcing freezes, other issuers like Circle (USDC) and Paxos (USDP) have also cooperated with regulators in freezing wallets. However, decentralized stablecoins like DAI may not be as easily controlled by centralized entities.
Tether freezes can create panic among traders, leading to liquidity disruptions on affected exchanges. They also raise concerns about censorship risks in crypto, potentially driving users toward more decentralized alternatives.
