“Garantex’s international pipeline helps defy Treasury sanctions by channeling rubles to crypto to dollars. Customers line up with bags of cash.”
Big Piles of Cash
The Wall Street Journal reports The Crypto Exchange Moving Money for Criminal Gangs, Rich Russians and a Hamas-Linked Terror Group
That is a free link for those wishing to read in entirety. Here are a few snips from a long article.
Despite its place on the U.S. blacklist, which restricts transactions with sanctioned entities, Garantex has become a major channel through which Russians move funds into and out of the country, according to trading data and people familiar with the firm. It has also been a vehicle for Russian cybercriminals to launder their earnings, U.S. authorities say.
Garantex’s growing role as a global conduit for illicit funds was underscored this month by evidence that Palestinian militants in part financed their operations through crypto in the lead-up to the Oct. 7 attacks in Israel. Digital wallets controlled by Palestinian Islamic Jihad, which joined Hamas in the attacks, received a portion of $93 million via Garantex, according to analysis by researcher Elliptic, which said Hamas also used a similar financing strategy.
The U.S. Treasury, in a report last year, said gaps in financial crime controls at crypto exchanges can allow terrorist groups to misuse them. Israeli Defense Minister Yoav Gallant said last summer the use of digital currencies was making the job of stopping terrorist financing ever more complex.
In Russia, the exchange is used to move rubles into other currencies, which is more difficult amid sanctions on Russian banks after the invasion of Ukraine. Customers deposit rubles in cash at Garantex’s offices to receive crypto, primarily in the form of stablecoins, a popular type of digital currency often pegged to the U.S. dollar. These can then be withdrawn as traditional currency abroad from a network of local partners, with little trackable record of the transactions.
Garantex’s expansion raises questions about the effectiveness of U.S. sanctions when targeted at entities that are financially insulated in a hostile territory, said Juan Zarate, a former senior Treasury and White House counterterrorism official. “It does suggest the limits of what OFAC can do,” said Zarate, referring to Treasury’s Office of Foreign Assets Control. “OFAC tools, though powerful, aren’t a silver bullet.”
Three weeks after the sanctions, Garantex told clients it had launched a partnership with an operator called Bithauz in the United Arab Emirates. In person at Bithauz’s Dubai office, customers could trade up to $5 million in tether at a time for dirhams, the local currency, and dollars. This sort of cash-based business, which is similar to Garantex’s other overseas partners, is difficult for international sanctions authorities to track, researchers say.
Tether, Not Bitcoin
The preferred currency for laundering appears to be Tether, not Bitcoin or crypto in general. The article mentioned tether three times. Bitcoin had no mentions.
Eventually, regulators will use money laundering claims to force use of a digital dollar at the Fed.
The aim will be to block all transactions into or out of dollars the regulators do not approve.
It’s coming. And there is a lot of complacency here from Bitcoin fans too. If conversion to fiat is impossible, Bitcoin would be reduced to barter.
But now, it is tether in the crosshairs.
Flashback of the Day
In 2017 I noted The former chief economist of the World Bank, Joseph Stiglitz Wants Bitcoin Banned.
“Bitcoin is successful only because of its potential for circumvention, lack of oversight,” Joseph Stigliz, currently a professor at Columbia University, said in an interview on Bloomberg Television today, as the cryptocurrency reached new all-time highs this week. “So it seems to me it ought to be outlawed. It doesn’t serve any socially useful function.”
I replied, I’ll tell you what ought to be outlawed: The Fed.
I Propose a Debate on Bitcoin Between Nassim Taleb and Lyn Alden
On September 11, 2023 I Propose a Debate on Bitcoin Between Nassim Taleb and Lyn Alden
In my post I noted a fundamental flaw of Bitcoin. Ironically, I think Alden would trounce Taleb.
Well, if we did not weaponize the monetary system illegally, they would not need to do crypto. Of course gold and silver are the only true money…
I don’t have to wonder – HOW MANY US DOLLARS (USD) PAID FOR 9/11 ?
!! IT WAS A LOT !!
A lot of $$$ USD $$$ paid for 9/11 !!!
THE WAR ON CRYPTO NEEDS TO END
PASS CONSTRUCTIVE LEGISLATION or STFU!!!!
And people here still think that the WSJ deals in facts! I read it in the WSJ so it must be true.
ha ha ha. i read it since i was 10 years old. for decades. i cancelled my subsription when murdoch bought it. i get pals sending me stuff. it’s a total junk paper now. that boy turns it all into shit. the old WAR STREET JOURNAL is now just a gossip paper for morons……….
Americans are slowly awaking to the governments claim to protect us by limiting our abilities to do many things. In the interests of Natural security has little to do with the common citizen but more to support and keep the government in power. Money laundering is their favorite to suppress its citizens and most likely meeting very few of their objectives.
Seems as if we need a much better way of collecting taxes that does not infringe on our rights of US citizens.
“Americans are slowly awaking to the governments claim to protect us by limiting our abilities to do many things.”
While I agree, it’s important to note that the government does these things at the behest of lobbyists and campaign donors.
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Jim Jordan 124:84. Hakeem the regime change might vote against Jim.
And anyone is surprised why?
On balance, I’m not sure our government serves a socially (or economically) useful function as it defines more and more crimes that become crimes only because they impede its expanding ambition to control absolutely everything. The biggest sanctions on the Russians are in support of the Ukraine war, and that war is turning out to be another immense folly by the US government and its demented ruling elites. It will end as another big fail by our stupendously stupid government. If crypto transactions accelerate that end, so much the better.
A better solution would be to encourage as much unencumbered use of the US dollar globally so that people can punish their governments for bad behavior by exchanging their currency for US Dollars. Similarly their local banks would suffer as well.
1) Hamas finance its op through creepto. Hamas duck in tunnel under hospitals,
mosques and schools.
2) Israel endgame, if successful, may be a shotgun marriage between Israelis and
Palestinians in Gaza and the west bank, to cause a systemic change, a change of behavior in the ME.
3) After death from bombing, starvation and dehydration, Gaza might stab Hamas
in the back.
4) Within a decade Palestinians may flourish, produce billionaires, ambassadors, high tech experts, richer than most Israelis, like the tobacco kings in Scotland.
Yes, Palestinians/Israelis , right.
I have some shares of a bridge in New York and it appears that you would be interested in such a forward-looking investment.
Lisa, Gaza city isn’t Stalingrad. The Palestinians were ordered to move
south. Hamas infrastructure, logistics, Hamas leaders apartments and
buildings that launched rockets to Israel were bombed out. Israel may take
over Gaza city, dissect Gaza, install Fatah back in Gaza.
River cafe sells chocolate BKLY bridge.
Israelis should have told the folks in Gaza to simply “walk” to Cyprus.
Might be easier than trying to go south, while under fire, through the rubble to an Egypt that doesn’t want them.
Not by high tech will they become rich but by becoming the Las Vegas of the Middle East with casinos, shows and lots of hookers. There will be a Hamas Sphere for concerts, sports and executions. They will drive big flashy cars and dress like pimps.
i’d bet on israel is let loose by pax dumbphuckistan(usa) in the next few years or decades. when USA no longer needs israel, they will be sacrificied and go the way of all our allies……..from indochinese fighting for us, and on and on…………
israel is just a pawn to usa queen and king. nothing more.
Russian Oligarch’s have historically used US real estate to launder money, they’ve also used low float penny stocks to do it, they call it a “wash sale”, one guy buys, the other guy sells = money transfer – so there’s no question they’d use Bitcoin, I’ve said this all along.
With the kind of money at their disposal, they undoubtedly manipulate Bitcoin price as well, pump a head fake, retailers buy – sell, let it dry out, pump another head fake -wash, rinse, repeat.
Any market that promotes secrecy and an alternative currency is going to have this problem, baffles me why it’s not mentioned more..
Bitcoin sign on front window – “Launder money here”
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I should have added, the same transparency problem exists with SuperPACs.
They’re not required to disclose funders, which brings pause to question why certain candidates are so Russia-friendly.
Lev Parnez and Igor Fruman helped shed some light on that theory, they were only caught because of Fed scrutiny over Giuliani, it happens a lot more than anyone thinks.
Menendez, seriously, you did it all wrong, don’t you even watch the other party?
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Which certain candidates are Russia friendly????
Would you care to name them please?
Keep an eye out for, say, any candidate that jumps to aid Israel when 1300 people are killed, but thinks we shouldn’t be getting into Russia’s business with Ukraine while they bomb hospitals, churches & apartment buildings killing tens of thousands.
You have to ask, are these political figures humanitarians, or is it perhaps another call they answer to.
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hunter’s daddy? ivanka’s daddy? btw, bitcoin was most likely a CIA invention to move money instead of the ancient hawala blockchain that spooks and emperors since roman times used. most of the crypto bros have decamped their operations offshore if they want the laundering business. some staying and going the way COIN has………..ps no doubt SBF was a useful idiot to his parents and the deep state to launder political gifts……………
Crypto tokens’ most obvious use cases are illicit activities and speculative trading. Blockchain is a transformational technology, but blockchain can and should proliferate without the darker side of “decentralized” mining.
“decentralised” is the whole point.
It’s what makes a currency trustworthy, period. It’s why Gold is money, while Dear Leader Biden’s foot fungus is not.
Anyone functionally numerate, can trust Bitcoin. Noone even half sentient, will ever trust some arbitrarily pulled-out-of-some-totalitarian-hack’s rear fiat.
Dark Money needs a place where large volumes can be laundered into legal currency. Anything that lowers that volume like cutting the tether is fair game and now there is a vey big national security reason of many countries to do so I expect it will be done. How to break the tether is something I have to look into. The obvious way would be to break the arbitrage opportunity.
Localmonero does that. Parallel independent transactions, where onramp and offramp can be phased out and an “avatar economy” with “avatar currency” can grow.
Anyone interested in banning mediums of transaction might want to see how prison economies work.
Governments attempting to turn their economies into prison economies that look like pretty kitchen gardens, and treating alternative transaction mediums as weeds, create new economies and stifle innovation by effectively censoring people like in Asia.
Why is it a surprise ?? It’s what cryptos are most efficient at, A great criminal money laundering and exchange system.
IOW: Exactly what people need, in this era of completely unconstrained totalitarian states arbitrarily deeming and finding and holding and judging and declaring, that whomever the lowbrow monkeys in charge don’t personally “like,” is a “criminal,” “terrorist”, “hobgoblin”, what have you.
NO legitimate government ever had any business being even remotely aware what “money” someone else has. Nor whether someone has any at all or not. Nor what he spends it on. Never did, never will.
The more of the Russian economy disappears from Putin’s, and Biden’s, view; the better. Ditto the economy of anyone; from any trashy, totalitarian lowbrow in some government office.
Current cryptos are problematic to use as payments for non-crime, because they are so darned volatile, wrt currencies most people need to pay their daily expenses in. Many “crimes” have margins high enough that this is less problematic. So it makes all the sense in the world that the earliest adopters, are mostly from industries deemed and held and what-have-you to be “criminal.”
As uptake in those industries grow, prices will stabilise. Gradually, at the margin, making transacting in crypto more attractive for, over time less and less purely, “criminal” actors. Until one day, they’re pretty much ingrained everywhere.
It’s mind-boggling to even imagine the size blinders one need to have, to not recognise that crypto, at the margins, are getting less and less exotic, unknown; and hence risky; year-in year out. While weaponisation of every fiat out there, along with turning every country into little more than a STASI surveillance state, moves the attractiveness of trading in fiat in the exact opposite direction. Putting those two together, hardly require a Fields Medal worth of logic.
The risk in crypto is morphing from volatility to Government prohibition/confiscation.
And jail.
Never mess with the “King’s” forging of coins. Many have loss limbs and lives trying to do so. Crypto seems new and creative but it is not. It will be crushed like a bug in the ground.
Maybe go trade in Beanie Babies, I don’t know but this is going to end and end badly for many who think they can operate without a physical force to back it up. Gonna find out what comes out of the end of the barrel makes these hard decisions for everyone remarkably very easy.
“The risk in crypto is morphing from volatility to Government prohibition/confiscation.”
In totalitarian countries, sure.
But crypto works. Fiat doesn’t. All you need, is some countries’ officials somewhere, willing to take crypto bribes in order to leave people alone. Then you have a necessary bridge. A bridge which people on both sides will earn a healthy amount from maintaining. Which will entice more of them from being set up.
Even banning black markets for national currencies, never work. Ditto banning Argentinians and Lebanese from getting their hands on currencies just the tiniest bit more sound than their own, like the USD. And that’s within national boundaries. Trying to ban an orders-of-magnitude-at-everything superior currency globally, makes banning illicit drugs seem like child’s play.
And it’s only getting harder: Crypto is getting a boost in usability and value, day in day out, simply from increased availability of ever cheaper processing power; as well as from ever more widespread understanding of how it works, its implications and its preferred patterns of use. While Fiat is getting less and less attractive every day, in lockstep with issuers getting more and more totalitarian and self dealing.
One would have to be fundamentally non-sentient, in order not to see where those developments, projected into the future, are inevitably leading.
If people know that the government knows every detail of their finances, perhaps we will elect better governments?
You will end up with an underclass of sinners, and a massive ideological police state, because Humans naturally form “them and us” groupings, and Humans like to have a faceless bureaucracy do their dirty work to “them” for “us”.
When the American government and The Federal Reserve Bank are the greatest criminal organizations on the planet, what else can anyone expect?
If you kill one rat, more will come.