U.S. sanctions Russia's largest darknet market Hydra and cryptocurrency exchange Garantex

The Office of Foreign Assets Control of the U.S. Department of the Treasury announced that it will impose sanctions on the darknet market Hydra and the virtual currency exchange Garantex.

The U.S. Treasury Department said in a statement Tuesday that it has cooperated with the U.S. Department of Justice, the FBI, the Drug Enforcement Administration, the Internal Revenue Service’s Criminal Investigation Service and the Homeland Security Investigations Agency to sanction the Russia-based darknet market and Garantex. The move by the U.S. government agency came on the same day that Germany’s Federal Criminal Police Office announced that it had shut down Hydra’s servers in Germany and seized more than $25 million worth of bitcoin connected to the market.

The sanctions are part of an international effort to "(stop) the expansion of malicious cybercrime services, dangerous drugs and other illicit products," according to the U.S. Treasury Department. U.S. Treasury Secretary Janet Yellen said ransomware operators and those involved in other cybercrime were able to operate and operate with "impunity" in Russia, posing a potential threat to U.S. interests.

The U.S. government agency accused Garantex of “willfully ignoring” anti-money laundering and countering terrorist financing requirements imposed on virtual currency exchanges by many regulators. In addition, it suggested that the company was run by individuals who demonstrated "willful disregard for regulations and compliance."

The OFAC investigation found that more than $8 million in funds related to ransomware attacks was transferred through Hydra, while Garantex facilitated more than $100 million in transactions "related to illicit actors and dark web markets." The U.S. Treasury Department, in cooperation with Estonian authorities, conducted an investigation into Garantex and determined that the exchange continued to operate in Russia.

The U.S. Treasury Department has listed more than 100 BTC, Tether (USDT) and Ether (ETH) addresses associated with Hydra and Garantex businesses as “Specially Designated Nationals” whose “assets are blocked and Americans have been broadly prohibited from communicating with these address for transactions". Additionally, the agency concluded that Hydra "has a high likelihood of posing, or substantially posing, a significant threat to the national security, foreign policy, or economic health or financial stability of the United States":

“Some virtual currency exchanges have been targeted by malicious actors, but others, such as Garantex, Suex, and Chatex, facilitate illegal activity for their own profit. Treasury will continue to use its authority to engage with other U.S. departments and agencies and our foreign partners to target malicious cyber actors and their facilitators, disrupting financial nodes associated with ransomware payments, cyberattacks, and other illicit activities."

These actions by the U.S. government follow sanctions imposed by the U.S. Treasury Department in September 2021 on Russian firm Suex OTC, accusing the company of allowing hackers to obtain cryptocurrency as payment for ransomware attacks. Since then, agencies such as the FBI and the Department of Justice have created task forces aimed at investigating and enforcing the law against actors using cryptocurrencies for money laundering and other cybercrime.

Yellen is expected to speak on the role of cryptocurrencies in the U.S. economy on Thursday at American University in Washington, D.C.

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