Russian Crypto Exchanges Evade Sanctions Through Shadow Networks
A new report from Transparency International Russia reveals a complex network of cryptocurrency exchanges and financial facilitators are helping Russia circumvent Western sanctions, moving illicit funds through offshore hubs and decentralized platforms. The investigation, published earlier this month, exposes the evolving infrastructure supporting sanctioned entities like garantex and its alleged successor, Grinex, demonstrating a remarkable ability to adapt and evade international pressure.
Sanctions-Busting Infrastructure
Garantex, initially registered in Estonia in 2019, was sanctioned by the U.S. Treasury’s Office of Foreign Assets control (OFAC) in 2022 for facilitating tens of millions of dollars in transactions linked to illicit activities. According to OFAC, the exchange aided a Russian ransomware-as-a-service operation, one of the world’s largest darknet marketplaces, and even enabled a known cryptocurrency launderer to move funds for Russian elites. Despite these sanctions, Garantex hasn’t disappeared; it has fragmented into a decentralized system, according to Kristine Baghdasaryan, author of the transparency international Russia report.
“Every time regulators cut off one ‘head’ of this crypto hydra, another appears under a new name,” Baghdasaryan stated in a news release. “Our findings show that Garantex did not disappear; it reorganised into a distributed system that hides crypto activity behind agency contracts, offshore legs, and Telegram-based workflows.”
The Rise of Exved and MKAN Coin
The report details how Garantex has morphed into a decentralized money laundering system supported by two key entities: Exved, a cross-border payment processing platform, and MKAN Coin, a Telegram-based crypto exchange operating out of Dubai. Exved is specifically designed to facilitate the import of dual-use goods into Russia, while MKAN Coin replicates Garantex’s core functions, offering a crypto-to-cash service for Russians seeking to move money abroad.
During a call with Paysol, researchers inquired about the company’s connections to Garantex and Exved, as well as the import of dual-use goods. “They evaded these questions, for sure,” Baghdasaryan noted. A compliance officer with Paysol’s legal team acknowledged the payment process is frequently used to facilitate the import of restricted goods into Russia, emphasizing the importance of “tailored documentation and logistics partners” to avoid triggering sanctions alerts.
Leaked Data reveals MKAN Coin’s Origins
Following their investigation into Exved, researchers discovered a trove of leaked Garantex material dating from 2021 to 2024, including emails, internal documentation, chats, and identity verification documents. This data led them to MKAN Coin, a Telegram-based crypto-to-cash exchange serving Russians looking to move money out of the country.
“While the name was new, the infrastructure, personnel, bots, and behavior patterns were not,” the report stated. “MKAN Coin inherited and rebranded Garantex’s laundering blueprint,extending it into a decentralized,global network designed to survive sanctions and scrutiny.” MKAN Coin operates branches in Kyrgyzstan, Spain, Brazil, Thailand, and Georgia, and the leaked documents revealed a former garantex CEO is behind the brand. Baghdasaryan emphasized that “[MKAN Coin] is a core product of Garantex,” offering crypto-to-cash transfers via Telegram,mirroring Garantex’s previous operations.
The continued ability of Russian cryptocurrency exchanges to adapt and evade sanctions highlights the challenges facing international regulators in combating illicit financial flows.The decentralized nature of cryptocurrency and the use of offshore financial hubs create meaningful obstacles to enforcement, demanding a more coordinated and innovative approach to disrupt these shadow networks.
The continued ability of russian cryptocurrency exchanges to adapt and evade sanctions highlights the challenges facing international regulators in combating illicit financial flows. The decentralized nature of cryptocurrency and the use of offshore financial hubs create significant obstacles to enforcement, demanding a more coordinated and innovative approach to disrupt these shadow networks.
