Tether Freezes $28 Million USDT on Sanctioned Russian Exchange Garantex, Platform Halts Operations

Tether, the issuer of the world’s largest stablecoin, has frozen nearly $28 million worth of USDT on the Russian cryptocurrency exchange Garantex, forcing the platform to suspend all trading and withdrawals.

On March 6, Garantex confirmed the freezing of 2.5 billion rubles (approximately $27 million) worth of USDT linked to its exchange. In a statement shared via Telegram, Garantex expressed frustration, stating, "Tether has entered the war against the Russian crypto market and blocked our wallets." The exchange also announced that it had temporarily halted all services, including withdrawals, while its website undergoes maintenance.

The freezing of Garantex's funds comes shortly after the European Union imposed sanctions on the exchange as part of its 16th sanctions package targeting Russia’s actions in Ukraine. The EU’s sanctions were enacted on February 26, further isolating the Russian crypto market from international financial systems.

In response to the freezing of its funds, Garantex issued a warning to its users, stating, “All USDT in Russian wallets is currently under threat.” The platform, which has a history of being linked to Russian entities, vowed to fight back against the sanctions, promising to continue its operations despite the significant setback.

Garantex, which has previously faced scrutiny, was first sanctioned by the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) in April 2022, making it one of the first cryptocurrency exchanges to be targeted by U.S. regulators due to its ties with Russia.

The European Union’s sanctions on Garantex, which include targeting the platform's association with Russian banks already on the EU’s sanctions list, mark an intensification of the West's efforts to cut off Russian entities from global financial networks. The EU's decision also aligns with ongoing international efforts to prevent sanctioned entities from using digital currencies to bypass traditional banking systems.

Tether has not yet provided any official comment on the decision to freeze the funds on Garantex. As of the time of publication, Cointelegraph's request for comment from Tether had not been answered.

The situation highlights the growing role that stablecoins like USDT play in global finance, particularly as regulatory bodies continue to tighten control over the use of cryptocurrencies by entities from sanctioned regions. The move further underscores the increasing use of blockchain-based solutions by governments and regulators to enforce sanctions and limit financial flows to and from restricted entities.