The full significance of cryptocurrencies like bitcoin was neutrality. The fact that no government, bank, or entity could stop you from using it, whether you were paying for a pizza, a forbidden book, or a bag of cocaine.
That, of course, began changing as soon as crypto’s value made it the perfect medium for illegal transactions, from ransomware to darknet marketplaces. Regulators worldwide required exchanges and other “off-ramps” blacklist cryptocurrency from accounts linked to criminal activities or individuals, despite illicit trades accounting for just 0.15 percent of global crypto movements in 2021.
But Russia’s invasion of Ukraine is a separate matter. Crypto’s nature as borderless money and the quantity of youngish, passionate people sitting on troves of crypto-millions made it a go-to method for Ukraine to increase funds from people outraged by Moscow’s actions. At the same time, there were worries that government officials and Russian President Vladimir Putin’s moneyed inner circle might side-step western sanctions by moving their assets into crypto.
Crypto Exchange Blocking Wallets
Cryptocurrency exchanges are reportedly stopping all transactions from accounts known to be linked to sanctioned individuals.
Crypto exchange Coinbase on Monday stopped over 25,000 Russia-linked addresses that it believes were linked to illicit activity to comply with sanctions against Russia. Binance, the world’s largest crypto exchange, has already placed and blocked at least one wallet linked to a sanctioned person and has adopted a proactive approach, investigating and blocking accounts of people who are understood to be close to individuals targeted by sanctions. Exchanges in most Western countries are needed to carry out know-your-customer and anti-money-laundering checks. However, some of them, including Binance, have been criticized for alleged laxity.
Yet Tigran Gambaryan, Binance’s vice president of global intelligence and investigations, considers crypto’s concerns will help prop up Russia are overblown. Crypto is not a very efficient way for a government and a nation-state to dodge sanctions, he states.
