Key Data

• Trading Name: Garantex
• Legal Entities: Garantex Europe OU, Russian entity not disclosed
  
• Activities: Crypto payment processor and exchange
  
• Location: Russia, Estonia
  
• Regulations: unregulated, had its Estonian license revoked
  
• Key People: Sergey Mendeleev
  
• Latest news: Garantex
• Latest update: Sept 8, 2024

Background:

Garantex is a Russian cryptocurrency exchange founded in 2019 by Stanislav Drugalev, a Russian tech specialist, and Sergey Mendeleev. The platform has quickly become a significant player in the Russian cryptocurrency market, specializing in converting rubles into other currencies. Originally registered in Estonia as Garantex Europe, the exchange now appears to operate primarily from Russia. The exact current legal entity structure is unclear due to regulatory changes and sanctions.

Offering:

Garantex provides the following services:

1. Cryptocurrency trading with fast execution and no hidden commissions
2. Convenient deposit and withdrawal options
3. A P2P trading section
4. Support for various cryptocurrencies

The exchange has positioned itself as a leader in self-regulation for the Russian crypto industry. It has gained notoriety for its ability to facilitate the conversion of rubles to cryptocurrencies, particularly Tether (USDT), through a network of cash exchangers inside Russia and abroad.

Compliance Situation:

Garantex’s regulatory status is complex and concerning:

1. In February 2022, Garantex lost its license to provide virtual currency services in Estonia due to supervision issues identified by Estonia’s Financial Intelligence Unit.
2. The exchange has been sanctioned by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) for facilitating illicit transactions, including those related to ransomware payments.
3. There are allegations of Garantex processing transactions for designated actors in Russia and Iran, raising significant compliance concerns.
4. The platform has been linked to criminal activities, with reports suggesting it has moved money for criminal gangs and wealthy Russians seeking to evade sanctions.
5. Despite these regulatory challenges, Garantex continues to operate, leveraging its position in the Russian market where it faces less scrutiny.

Rating Conclusion

Given its sanctions status, alleged links to illicit activities, and operation in a high-risk jurisdiction with limited oversight, Garantex presents significant risks for financial institutions and users. Its continued operation despite losing its Estonian license and facing U.S. sanctions indicates a lack of adherence to international regulatory standards. Thus, we included Garantex in our Black Compliance and Red Risk lists.