TronWeekly

Crypto World News

You are here: Home / Archives for OFAC

OFAC

Tether Freezes $28M USDT in Garantex Exchange, Causing it to Shut Down

by

  • Garantex has suspended operations after Tether froze over 2.5 billion rubles ($27 million) in USDT. 
  • The EU sanctioned the exchange in February and by the U.S. in 2022 for processing illegal transactions and violating anti-money laundering laws.

Garantex has stopped its operations after Tether blocked almost 2.5 billion rubles’ worth of USDT. Russia’s biggest sanctioned crypto exchange, Garantex, has currently stopped all transactional services after Tether blocked over 2.5 billion rubles in USDT. The popular stablecoin provider, Tether, blocked the exchange access to $27 million USD.

Garantex Confirms Blocked Funds and Halted Operations

On the 6th of March, the exchange shared information regarding the frozen funds on their official telegram group informing users of the situation and stating that Tether had taken action against the country’s digital asset market by freezing it’s wallets. 

And as a result of that, withdrawals and other transactions are on hold while the team tries to fix the problem. Despite this, Garantex assured users that they remain determined to overcome the challenge. The exchange also told Russian users that their USDT might not be safe. 

As of time of writing, Tether has not said anything about this yet. But in the past, people have questioned Tether’s dealings with Russian-linked groups.

Grantex Other Sanctions 

On Feb 26h, The European Union added Garantex to its 16th round of sanctions against Russia. This action follows previous measures by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), which sanctioned Garantex in April 2022. 

The exchange faced penalties for processing illegal transactions and failing to follow anti-money laundering (AML) and counter-terrorism financing (CFT) laws. These violations raised concerns among regulators, leading to strict actions against the platform.

The Investigations done has shown that over $100 million worth of transactions on Garantex were connected to criminal organizations and illegal online markets. The U.S. Treasury specifically mentioned the exchange’s involvement in handling funds linked to the Russian Ransomware-as-a-Service group Conti and the now-defunct Hydra marketplace. 

Currently, the officials in the United States and the United Kingdom, are looking into over $20 billion in USDT transactions that was processed through Garantex. If confirmed, this could be one of the biggest violations of economic sanctions against Russia since the conflict in Ukraine began.

However, authorities have stated that these inquiries are still ongoing, and no final decision has been made regarding Tether’s involvement in any wrongdoing.

Tether’s decision to freeze funds on Garantex shows its commitment to working with law enforcement to stop illegal activities. By blocking access to these assets, the company is demonstrating its willingness to support global regulatory efforts. 

Related Reading | Cardano Mystery: Why Trump Selected ADA Without Consulting Hoskinson 

Ethereum Foundation Donates $1.25M to Support Tornado Cash Developer

by

  • Ethereum Foundation pledges $1.25M for Alexey Pertsev’s defense.
  • Pertsev’s appeal challenges legal risks for blockchain developers.
  • Vitalik Buterin and Paradigm contribute to Tornado Cash defense fund.

The Ethereum Foundation has pledged $1.25 million to support the legal defense of Tornado Cash developer Alexey Pertsev. This donation comes as Pertsev prepares to appeal his money laundering conviction in the Netherlands. The foundation’s support emphasizes the importance of privacy and the right to write code without criminal liability.

Ethereum Foundation Pledges Support for Pertsev

The Ethereum Foundation’s donation follows previous contributions from the Ethereum community to Pertsev’s defense. In December 2024, Ethereum co-founder Vitalik Buterin donated 50 ETH, worth around $170,000 at the time, to Pertsev’s defense fund. In January 2025, crypto investment firm Paradigm, donated $1.25 million to help fund the defense of another Tornado Cash developer, Roman Storm, who faces trial in the U.S.

Ethereum Foundation
Ethereum Foundation Donates $1.25M to Support Tornado Cash Developer 2

Pertsev, a Russian national living in the Netherlands, was arrested in August 2022 for his role in Tornado Cash. In May 2024, he was convicted of money laundering and sentenced to five years and four months in prison.

Pertsev was granted conditional release in early February 2025. He is currently under electronic monitoring as he prepares for his appeal. The Ethereum Foundation’s donation will allow Pertsev to focus entirely on his legal defense.

Debate over Legal Risks Facing Software Developers

Pertsev’s case has attracted significant attention due to its potential implications for the blockchain and crypto space. Moreover, the case against Pertsev and other Tornado developers has sparked a debate about legal responsibilities of software developers

In addition to his legal battle in the Netherlands, the U.S Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash in August 2022. Authorities claimed the platform had facilitated bad actors such as North Korean hackers to launder over $7 billion worth of crypto assets.

Impact of the Legal Crackdown on Software Developers

This case raises concerns about potential criminal liability for developers who create open-source software. The Ethereum Foundation’s donation underscores its commitment to protect privacy, promote innovation and support embattled developers in the blockchain space.

The Ethereum community has shown strong support for Pertsev and Tornado Cash developers , with donations from various stakeholders. These contributions reflect the ongoing concerns about the legal risks faced by developers in the decentralized finance space. 

The outcome of Pertsev’s appeal and the upcoming trial of Roman Storm, could have major implications for the future of blockchain technology and the legal landscape of decentralized applications in the future.

This legal battle and Ethereum Foundation’s donation highlights the increasing tension between privacy rights and regulatory oversight. It also raises important questions about the intersection of technology, law, and individual rights in the digital ecosystem.

Sanctions Strike DPRK’s Crypto Operations: A Bold Move by UAE and US

by

  • OFAC and the UAE collaborated to impose sanctions on actors involved in North Korea’s illicit crypto asset laundering network.
  • Sanctions target two individuals and one UAE-based entity aiding DPRK’s WMD and ballistic missile programs.
  • These efforts aim to disrupt North Korea’s financial operations, supporting destabilizing activities.

In close coordination with the UAE Government, the US Treasury Department’s Office of Foreign Assets Control sanctioned two individuals and a UAE-based front company to provide assistance in North Korea’s crypto laundering schemes supporting Pyongyang’s WMD and ballistic missile programs.

The sanctions target Lu Huaying and Zhang Jian, both UAE-based Chinese nationals, along with Green Alpine Trading, LLC. The network is connected to DPRK agent Sim Hyon Sop, already designated under U.S. and UN sanctions for orchestrating financial schemes to support North Korea’s regime.

Laundering Millions Through Crypto Assets

Lu Huaying is accused of laundering several millions of dollars in fiat currency from the revenue-generating projects of DPRK’s from early 2022 until September 2023. Zhang Jian, another key player, is accused of facilitating currency exchanges and acting as a courier for Sim Hyon Sop. Green Alpine Trading, LLC was used as a key conduit to transmit funds to North Korea.

These activities are further evidence of the continued use by the DPRK of crypto assets, fraudulent IT work, and money laundering in order to finance its WMD ambitions. Such operations further underscore growing ties between Pyongyang and international players-destabilizing implications that well surpass the Asian continent.

Implications of the Sanctions

The sanctions freeze all U.S.-linked assets of the designated individuals and entities, prohibit all transactions with them by U.S. persons and institutions, and impose additional blocking and reporting obligations on U.S. persons and institutions. Those who violate the sanctions may face enforcement actions, including secondary sanctions.

OFAC emphasized that these actions should not be punitive but a means to change behavior. This action, taken in coordination with the UAE, represents a broader international commitment to impair the illicit North Korean financial regime and, with it, its destabilizing behavior.

Related | 7 Best Coins to Buy This Week That Could Be Worth a Closer Look

OFAC’s Fury Unleashed: 13 Crypto Firms, 2 Individuals Blacklisted

by

Crypto entities are under scrutiny as the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has imposed sanctions on 13 entities and two individuals. These sanctions come in response to their alleged facilitation of sanctions evasion on behalf of Russian nationals through the provision of cryptocurrency-related services.

The OFAC’s statement highlights the concerning trend of utilizing alternative payment mechanisms, including digital assets, to bypass U.S. sanctions. Brian E. Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence, emphasized the necessity of disrupting such activities to impede the flow of funds supporting Russia’s actions in Ukraine.

In a blog post, Chainalysis, a blockchain analytics firm, detailed the involvement of some sanctioned crypto firms in enabling sanctions evasion. The majority of these entities, predominantly based in Russia, have been identified for their roles in assisting sanctioned Russian financial institutions to maintain connections to the global financial system.

As global regulators tighten their grip on crypto-related activities, these sanctions serve as a warning to entities engaging in illicit financial practices. The industry faces increasing pressure to adhere to regulatory standards and prevent exploitation for unlawful purposes.

Crypto-related Financial Frauds on Rise, Warns Central Bank of Russia

The Central Bank of Russia has issued a stark warning regarding the proliferation of financial scams leveraging digital assets. In its recent report, the bank highlighted the alarming trend of fraudsters utilizing crypto to lure victims and facilitate illicit transactions. According to TWJ, nearly all identified pyramid schemes and illegal brokerage activities in 2023 involved digital assets in some capacity.

Defined as “fake investment projects,” these schemes predominantly operate online, often spreading through popular platforms like Telegram and social media networks. The report revealed a concerning uptick in such fraudulent activities, with a significant increase observed compared to previous years.

Notably, digital assets have become the preferred mode of payment among these illicit entities, with approximately 1,500 schemes accepting crypto payments. Moreover, illegal brokers and dealers are increasingly exploiting crypto themes to perpetrate scams, offering fraudulent investments and flouting regulatory requirements.

To combat this growing menace, the Central Bank collaborated with relevant authorities to clamp down on over 11,200 websites associated with illegal financial activities and pyramid schemes. However, the report underscores the need for continued vigilance and regulatory measures to safeguard investors from falling victim to crypto-related financial frauds.

Binance Settlement Spurs Coinbase & Bybit Growth

by

In the aftermath of Binance’s recent settlement with the U.S. Department of Justice, two major players have emerged as the apparent victors in the crypto exchange landscape. According to a report from Kaiko, Coinbase and Bybit are enjoying newfound prominence, while the fate of Binance remains uncertain.

Binance’s Regulatory Settlement

The settlement, which saw Binance agreeing to a hefty $4 billion penalty, the retention of an independent compliance monitor for three years, and an overhaul of its AML/KYC programs, also involved agreements with the CFTC, FinCEN, and OFAC.

Notably absent from the resolution was the SEC’s ongoing lawsuit against Binance and its U.S. arm. The Wall Street Journal reported that the SEC is actively investigating whether Binance executives had backdoor access to customer funds, keeping the legal cloud over the exchange.

With Binance facing regulatory scrutiny, speculation is rife about the implications for a potential spot Bitcoin ETF and which exchanges stand to benefit from the fallout. COIN, DYDX, and UNI have all experienced a rally following the settlement, prompting industry watchers to assess the landscape for potential winners.

In terms of ETF prospects, an analysis of BTC volumes and the SEC’s historical decisions suggests that the settlement may not significantly impact the likelihood of approval. The SEC has previously emphasized the need for a surveillance sharing agreement with a market of significant size, making the fate of a BTC ETF uncertain despite Binance’s settlement.

image 5 3
Binance Settlement Spurs Coinbase & Bybit Growth 6

Turning the spotlight on Binance itself, despite significant outflows, there’s limited evidence of a mass exodus from the exchange based on liquidity data. Market depth has actually increased since news of the settlement broke, with only minor disturbances in spreads for top BTC instruments.

The only cause for concern arose when TUSD experienced a rapid depegging down to 0.995 Tether, attributed in part to a massive $3 million market sell order. Some speculated a connection to Tron being used in terror financing, but it appears the swift sell-off was triggered by the conclusion of Binance’s Memecoin “Launchpool” on November 26.

image 5 1
Binance Settlement Spurs Coinbase & Bybit Growth 7

Coinbase & Bybit Gain Traction

In the aftermath, Coinbase has emerged as a strong performer, with its stock gaining a remarkable 75% in a single month. The prevailing narrative suggests that Coinbase is poised to benefit from improving market conditions as the bear market potentially recedes.

image 5 2
Binance Settlement Spurs Coinbase & Bybit Growth 8

Examining market share trends, Bybit stands out as the immediate winner, consistently gaining market share in every hour, growing by more than 20% in 16 out of 24 hours. Coinbase, on the other hand, experienced significant growth outside of U.S. trading hours, particularly in Europe and Asia.

Despite Coinbase’s gains, Binance remains the leader in liquidity for both BTC and altcoins, with Bybit quietly improving its liquidity over the past year. While early trends appear positive for Coinbase and Bybit, Binance’s resilience is evident in its ongoing leadership in liquidity.

As the crypto exchange competition unfolds, a recent development adds an intriguing twist – Coinbase’s revelation to customers of a subpoena from the CFTC related to Bybit. While theories abound that Binance may lose market share, the compliance monitor and enhanced AML/KYC procedures could potentially bolster trust in the exchange, maintaining its standing in the market.

In the evolving saga, it seems that a positive outcome may be in store for all parties involved: the U.S. government secures a win, Binance can continue operations with increased compliance, and other exchanges have the opportunity to grow in the shifting landscape of the cryptocurrency market.

Related Reading |  XRP Three-Candle Symphony – Will It Hit $10 Or Soar To $50? 

Binance’s Commex Controversy: Questions Over Russian Ties & Shell Company Operations

by

Adam Cochran, a partner at CEHV and a notable figure in the cryptocurrency industry, has voiced serious concerns about Binance’s recent business dealings. Taking to the Twitter thread, Cochran alleged that Binance might have violated OFAC regulations.

He then dropped a bombshell by accusing the exchange of being involved in money laundering activities with Russian funds. This accusation came on the heels of its announcement yesterday that it was selling its Russian business to Commex.

As reported by TronWeekly:

The platform has set in motion an off-boarding process that will span up to one year to ensure a seamless transition for its existing Russian users. It emphasized that all assets belonging to current Russian users are entirely secure and protected throughout this transition period.

Cochran grew suspicious whe­n he discovered that Comme­x, a relatively unknown entity, had a pre­vious identity as a commerce cre­dit card company until the early 2000s. His doubts intensifie­d when he delve­d into the domain’s name serve­r history and found recent updates, sugge­sting a hastily assembled operation.

image 61

Binance Cloud Raises Eyebrows 

His investigation revealed that Commex was a new Seychelles-based company, seemingly running on Binance Cloud. It was particularly intriguing as Binance Cloud had ceased to exist in 2022, making Commex’s operations highly questionable. Moreover, Cochran discovered that Commex allowed users to log in using “Binance” as the primary call to action.

image 62

What added to the mystery was that Binance Cloud exchanges could share liquidity with Binance, as confirmed in its blog posts. It explained how Commex achieved a substantial trading volume on its first day of operation.

The situation raised several critical questions about the exchange’s intentions and practices, particularly its connection to the Russian market and the possible manipulation of cryptocurrency prices. 

Cochran’s investigation also brought atte­ntion to the intricate network of ope­rations involving its local “agents.” These­ agents played a significant role in bypassing KYC limitations impose­d in sanctioned regions.

It remains to be­ seen how Binance will re­act to the increasing scrutiny surrounding its business practices and the allegations of its ties with Russian oligarchs and war criminals. The­ crypto industry is undoubtedly entering a phase of heightene­d vigilance and regulatory examination following the­se alarming accusations.

Related Reading | Kraken Secures European Foothold: EMI License In Ireland & VASP Registration In Spain

Ethereum’s OFAC Compliance: A Dramatic Drop In Censorship Post-Merge Upgrade

by

Ethereum’s compliance with the Office of Foreign Assets Control [OFAC] has undergone a significant transformation, reduced by more than half since the momentous Merge upgrade was implemented in September 2022. OFAC-compliant blocks on Ethereum are those that exclude transactions involving parties subject to sanctions by the U.S. Treasury Department’s Office of Foreign Assets Control. The decline in compliant blocks is seen as a victory by those advocating for reduced censorship within the Ethereum ecosystem.

Prior to the Merge event, Ethereum’s OFAC compliance had been on an exponential rise. In November 2022, a substantial 78% of all Ethereum blocks were in compliance with OFAC regulations. This uptick was largely attributed to entities like cryptocurrency exchanges choosing to operate by censoring MEV-Boost relays on their validators.

Among the list of top offenders in terms of censorship were well-known platforms such as Binance, Celsius Network, Bitfinex, Ledger Live, Huobi [HTX], and Coinbase, according to data from MEV Watch. However, as of September 27, the OFAC compliance rate for Ethereum has plummeted to 30%, marking an overall reduction of 57%.

Ethereum
Ethereum's OFAC Compliance: A Dramatic Drop In Censorship Post-Merge Upgrade 12

As of today, five out of the six largest block builders within the Ethereum network are in compliance with OFAC sanctions, according to Toni Wahrstatter, a researcher in the Ethereum community. Notably, the sole remaining large builder, titanbuilderxyz, continues to include OFAC-sanctioned transactions, primarily those related to Tornado Cash, in their blocks.

While the relay situation had improved significantly, thanks to the introduction of Ultra Sound, Agnostic, and BloXroute relays, there has been a resurgence in censorship by many of the top builders. This resurgence means that these builders no longer incorporate Tornado Cash transactions into their blocks.

The concept of censorship resistance therefore holds paramount importance in maintaining political neutrality within blockchain networks. The principle is that no single entity should wield control over two-thirds of a blockchain’s content as this goes against the ethos of the core values of decentralization.

Critical Role Of Non-Censoring Relays In Ethereum

To counter OFAC compliance, operators must employ relays that do not engage in censorship based on OFAC requirements. Among the seven major MEV-boost relays most commonly used, only three do not censor in line with OFAC compliance requirements, as per MEV Watch.

It is imperative to note that while not all blocks constructed by OFAC-compliant relays engage in censorship, all blocks built by OFAC-compliant relays will indeed censor when non-compliant transactions are broadcasted on the network. This underscores the significance of validators outside the U.S. considering the deployment of non-censoring relays for the greater benefit of the Ethereum network.

Ethereum Blocks Complying with OFAC Orders Drop to Lowest Level since October: Report

by

The compliance rate of Ethereum blocks with orders from the U.S. Office of Foreign Asset Control (OFAC) has reached a new low of 47%, the lowest since October 2021, following a peak of 79% on November 21st, 2022, according to a February 14th report. This development marks a significant milestone in the fight against censorship.

Ethereum Community Fighting Censorship

Blocks that comply with OFAC rules exclude transactions that involve parties under the U.S. Treasury Department’s OFAC sanctions. The recent decrease in compliant blocks could be considered a victory for those who are against censorship in the Ethereum ecosystem.

MEV-boost relays, including the BloXroute Max Profit relay, Ultrasound Money relay, and Agnostic Boost relay, are being cited as a possible cause for the drop in OFAC-compliant blocks.

These relays do not censor transactions in accordance with OFAC requirements and act as trusted mediators between block producers and block builders. It enables Ethereum validators to outsource their block production to other block builders.

Lachlan Feeney, Labrys CEO and creator of MEV Watch praised the Ethereum community for their handling of the censorship problem that arose after the Merge. 

Feeney emphasized the significance of the recent decrease in censorship-compliant blocks, which was accomplished without implementing a UASF. He also mentioned that some ETH community members suggested a soft fork before the Merge to address censorship.

With still more work to be done, Feeney said :

I am incredibly proud of the Ethereum community for the progress we have made with this issue. When we released the MevWatch tool drawing attention to a flaw within Ethereum, the community did not stick its head in the sand but instead rose to the occasion and made significant progress addressing the issue. 

On August 8th, 2022, OFAC sanctioned ETH and USDC wallet addresses using Tornado Cash. The percentage of OFAC-compliant blocks on Ethereum has been steadily decreasing since January 29th, 2023, but with minor spikes. 

After the first 24 hours of Ethereum’s new proof-of-stake consensus mechanism on September 16th, 2022, only 9% of blocks were OFAC-censored, but it sharply increased over the next two months, peaking in November last year. Since then, the percentage of OFAC-compliant blocks had remained in the 68-75% range until January 29th, 2023, when it was 66%.

Nevertheless, the decrease in OFAC-compliant blocks could be seen as a positive development for those who oppose censorship within the Ethereum ecosystem. However, further work is still required to ensure that the network remains open and accessible to all.

Related Reading | Paxos Under Fire: SEC Alleges BUSD is Unregistered Security, NYDFS Orders Halt of Issuance

Kraken Bows Down Before US Treasury, Agreed To Remit $360k

by

Kraken, the world’s second-largest crypto exchange by market cap has reached a settlement deal with the U.S. Treasury Department’s Office of Foreign Assets Control [OFAC] over allegations of serving customers in Iran, as per the statement released by OFAC.

The U.S. Department of the Treasury’s Office of Foreign Assets Control [OFAC] today announced a settlement with Payward, Inc. d/b/a Kraken (“Kraken”), a Delaware-incorporated virtual currency exchange with operations in the United States and elsewhere.  

As part of the settlement with the OFAC, Kraken agreed to pay a fine of $362,158.70 and also consented to invest an additional $100k in certain sanctions compliance controls.  

The press release cited Kraken’s failure to implement relevant geolocation tools, including an automated internet protocol [IP] address blocking system, in a timely manner.

OFAC claimed that the US-based trading platform exported services to customers who looked to be in Iran and used Kraken’s platform to transact in digital currency.

Further details revealed that the firm allegedly processed over 820 transactions that came to be around $1.68 million on behalf of customers who may have been located in Iran.

The potential breaches, according to the Department of the Treasury, were “non-egregious and willingly self-disclosed” between October 14, 2015, and June 29, 2019.

OFAC argued despite Kraken having a sanctions compliance policy in place to prevent users from signing up in restricted countries, the platform “failed not to impose IP address blocking” on activity across its platform at the time of the alleged violation.

Kraken Failed To Implement “IP address blocking”

This failure on the part of Kraken emboldened some users to register from locations that were not subjected to US sanctions and then proceed to conduct transactions from sanctioned locations, like Iran, according to IP address data obtained by the Treasury Department.

Marco Santori, the platform’s chief legal officer told in an interview that the firm has since made a number of changes, including adding geolocation blocking to stop users from accessing the site in prohibited locations and hiring a specific head of sanctions.

Additionally, the business has spent money on staff training on sanctions compliance and has put in place “blockchain analysis tools to assist with sanctions monitoring.”

The leading exchange was among other major industry players like Coinbase, Binance, Gate.io, etc to publish proof-of-reserves, including liabilities, as part of their audits.