In recent days, Coinbase, the largest American cryptocurrency exchange listed on the Nasdaq, announced in a post on its corporate blog that it has blocked 25,000 Russian accounts involved in unspecified illegal activities.
Coinbase blocks Russian accounts
“Today, Coinbase blocks over 25,000 addresses related to Russian individuals or entities we believe to be engaging in illicit activity, many of which we have identified through our own proactive investigations. Once we identified these addresses, we shared them with the government to further support sanctions enforcement”.
reads the company’s post.
This decision comes after that in recent days, Ukraine’s Vice President and Minister of Technological Innovation Mykhailo Fedorov had appealed to exchanges to block their Russian users precisely to prevent sanctions being circumvented through cryptocurrencies.
I'm asking all major crypto exchanges to block addresses of Russian users.
It's crucial to freeze not only the addresses linked to Russian and Belarusian politicians, but also to sabotage ordinary users.
— Mykhailo Fedorov (@FedorovMykhailo) February 27, 2022
In response to the Ukrainian minister’s tweet, the CEO of Kraken, one of the world’s largest exchanges, said that while he understood the Ukrainian reasons, he could not do so in order not to undermine the libertarian value that Bitcoin embodies.
1/6 I understand the rationale for this request but, despite my deep respect for the Ukrainian people, @krakenfx cannot freeze the accounts of our Russian clients without a legal requirement to do so.
— Jesse Powell (@jespow) February 28, 2022
Coinbase Chief Legal Officer Paul Grewal was keen to comment on the company’s decision, which would be in full compliance with the sanctions regime imposed by the international community on Russia after its invasion of Ukraine.
“In the past few weeks, governments around the world have imposed a range of sanctions on individuals and territories in response to Russia’s invasion of Ukraine. Sanctions play a vital role in promoting national security and deterring unlawful aggression, and Coinbase fully supports these efforts by government authorities. Sanctions are serious interventions, and governments are best placed to decide when, where, and how to apply them”.
Russia circumvents sanctions with cryptocurrencies
This decision could be a first step towards limiting the ability to use cryptocurrencies to evade sanctions, as the US Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, said on Friday.
In an official statement, the body that monitors against financial fraud said it sees cryptocurrencies as a possible means for Russia to try to evade sanctions linked to the country’s military action in Ukraine.
“Although we have not seen widespread evasion of our sanctions using methods such as cryptocurrency, prompt reporting of suspicious activity contributes to our national security and our efforts to support Ukraine and its people”.
FinCEN’s statement reads.