Coinbase says it is currently blocking 25,000 crypto addresses associated with Russian individuals or entities, defending itself against accusations that Russia can avoid sanctions with crypto. In a blog post published yesterday, General Counsel Paul Grewal outlined how the financial exchange is complying with new rules imposed amid the ongoing invasion of Ukraine. This includes using “sophisticated blockchain analytics” to identify accounts that are indirectly linked to blocked users.
Coinbase indicated that the 25,000 blocked accounts were “associated with Russian individuals or entities that we believe are engaged in illegal activities.” It does not specify exactly when they were blocked or how many restrictions were associated with the current sanctions – for example, in one example, Coinbase cited 2020 sanctions against a specific Russian citizen with 1,200 potentially linked accounts.
“Coinbase fully supports these government efforts”
“Sanctions play a vital role in maintaining national security and deterring illegal aggression, and Coinbase fully supports these government efforts,” Grewal said. While cryptocurrency wallets can be anonymous and do not require interaction with traditional banks, he notes that transactions are “traceable, persistent and public,” potentially making it easier to fight illegal accounts by preventing them from being bought or sold. cryptocurrency through a service like Coinbase. “Digital assets have properties that naturally deter common approaches to circumventing sanctions.”
US lawmakers have questioned whether cryptocurrency companies are complying with sanctions against Russia. Four senators, including Elizabeth Warren (D-MA), sent a letter last week urging Treasury Secretary Janet Yellen to chart enforcement plans.
Cryptocurrency companies were quick to disagree with the analysis, downplaying the importance of digital currency for large-scale illegal transactions. Binance founder Changpeng Zhao called the cryptocurrency “too small for Russia,” citing its extremely low adoption rate. “The Russian government and other entities under sanctions will require virtually inaccessible amounts of digital assets to effectively counter the current sanctions,” Grewal wrote. (Sanctions do not yet require lockdowns for ordinary Russian citizens, despite Ukraine’s calls to extend them.) Conversely, they pointed to extensive cryptocurrency raising operations in Ukraine, which had raised about $54 million as of the end of last week.
Russia is increasingly isolated from the larger non-cryptocurrency financial system. Among other things, Visa and Mastercard suspended operations in the country for the weekend, leaving cardholders within Russia dependent on Russia’s national payment card system.