Coinbase has blocked more than 25,000 accounts of Russian citizens. What is the reason?
Representatives of Coinbase, a major US cryptocurrency exchange, announced that they have blocked more than 25,000 accounts belonging to Russian citizens or Russian organizations suspected of illegal activities. These accounts were identified during the exchange’s “proprietary investigations”. They were later handed over to the US government to “further support the application of sanctions”. Recall that Russia has been the target of a huge number of Western sanctions because of its activity in Ukraine. We tell you more about the situation.
The issue of blocking Russian residents against the backdrop of what is happening today is more relevant than ever. While platform leaders are in no hurry to ban the country’s citizens as a preventive measure, some bans are already being felt. For example, the day before, the Swiss government announced the blocking of digital assets of Russians on the sanctions list. We wrote about this in a separate article.
Cryptocurrency exchange sanctions
More information was posted on the blog by Coinbase’s chief legal advisor Paul Grewal. Here’s his quote, published by news outlet Decrypt, in which he shares details of the situation.
Over the past few weeks, governments around the world have imposed a series of sanctions on individuals and territories in response to Russia’s invasion of Ukraine. Sanctions play a vital role in enhancing national security and deterring illegal aggression, and Coinbase fully supports these initiatives.
Accordingly, the cryptocurrency exchange has now changed its rhetoric and made it clear that it is ready to block the accounts of Russian citizens on its own initiative. At the end of last week, Coinbase CEO Brian Armstrong said that the platform would block only those Russians who are on the sanctions list, which means that it was not planned to ban their accounts without doing so. Read more about this in a separate article.
Coinbase CEO Brian Armstrong
The blog emphasizes that Coinbase is seeking to do its part to support the “critical economic sanctions” imposed on Russian individuals and entities due to the current geopolitical conflict. To provide such support, the exchange is taking steps to block access to sanctioned entities, identify attempts to circumvent sanctions, and anticipate threats.
This includes screening potential customers against lists of sanctioned individuals and entities and tracking IP addresses belonging to sanctioned regions around the world. A Coinbase spokesperson also told reporters last week that the exchange is working with industry-leading threat intelligence providers that focus on monitoring emerging legal risks around the world.
In addition, the blog touched on the issue of circumventing sanctions with crypto. The following quote touches on this point.
Digital assets have properties that naturally inhibit common approaches to sanctions evasion.
The whole point is that the blockchain of most cryptocurrencies is public and accessible to everyone. Therefore, attempts to move huge sums through the crypto market to circumvent sanctions would be immediately visible to international regulators. They would presumably immediately take appropriate measures to block crypto platforms and their links to banks.
In addition to these technical advantages, the adoption of digital assets is still in its infancy, making it unlikely to be used for widespread sanctions evasion.
As a reminder, this view is also supported by global experts. For example, in April 2021, former CIA chief Michael Morell said that criminals are not comfortable using Bitcoin. It's all down to the eternal traces that the cryptocurrency leaves in its blockchain.
Coinbase
Coinbase’s competitors will follow similar measures. Previously, Binance stated that the platform will be forced to comply if there are instructions from financial regulators to impose sanctions against Russian users. So, for now, the scenario of circumventing the sanctions pressure with the help of digital assets looks very unlikely. In addition, the Central Bank is in no hurry to recognize crypto as a means of payment and certainly will not actively use it in the near future.
We believe that it is impossible to predict what will happen - especially given the rumors that the Russian government may cut off access to the outside internet. Therefore, the situation here could either remain in the current conditions or roll back to a complete ban on such platforms. In the end, time will traditionally provide the answers to all the questions.
What do you think about it? Share your opinion in our millionaires’ cryptochat. There we will discuss other important news affecting the world of decentralized assets.
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