Coinbase has blocked 25,000 cryptocurrency wallet addresses related to Russian individuals or entities it considers engaging in illegal activities.
The platform acted in response to allegations that Russia was evading sanctions in its ongoing invasion of Ukraine using cryptocurrencies, The Verge noted in a report.
Coinbase Complying with Efforts to Isolate Russia over Ukraine Invasion
Coinbase chief legal officer Paul Grewal said in a blog post that the company was complying with new rules amid global backlash against Russia for its invasion of Ukraine. He indicated that Coinbase was utilizing "sophisticated blockchain analytics" in pinpointing accounts indirectly connected to blocked users. He said the company will include them in an internal blocklist.
These banned wallets represent around 0.2 percent of the financial exchange's 11.4 million monthly transacting users, Bloomberg reported based on 2021 figures.
Coinbase said the 25,000 sanctioned accounts had been linked to the Russian entities they believed were "engaging in illicit activity."
Grewal emphasized that Coinbase fully supports the U.S. government in "deterring unlawful aggression" as it indicated that "sanctions play a vital role in promoting national security." He added that while these crypto addresses could be anonymous and bypass traditional banking transactions, these accounts are "traceable, permanent, and public", allowing Coinbase to easily crack down on illegal crypto activity, prohibiting these entities from trading their digital assets.
As Russia started its attacks on Ukraine, the Biden administration appealed to crypto exchanges to assure that Russian entities won't use digital currencies to evade sanctions imposed by the U.S., Bloomberg added.
Coinbase, Other Crypto Exchanges Won't Ban Ordinary Russian Citizens Suffering from Ruple Crash
Coinbase, together with other top crypto exchanges, said it will comply with U.S. government directives to ban the sanctioned Russian entities, but indicated that they won't prohibit all Russian users. Coinbase CEO Brian Armstrong previously noted that ordinary Russians have been using cryptocurrencies as a "lifeline" due to the collapse of the ruble.
This is despite Ukraine's plea to extend the sanctions to ordinary Russian citizens.
Crypto 'Too Small' in Russia for Sanctioned Entities to Use for Illicit Activities
Many other crypto firms have shown their disagreement with the U.S. government's analysis underscoring how crypto helps Russians evade sanctions. Binance founder Changpeng Zhao noted very low adoption of crypto in Russia, thus making it quite unlikely for Russian individuals to use or even know how to utilize digital currencies for malicious ends.
Grewal said that banned individuals or the Russian government need "virtually unobtainable amounts of digital assets" to counteract the restrictions. Ukraine, on the other hand, has been using crypto for fundraising efforts, which has since raised $54 million, The Verge further reported.
Russia has been isolated from the traditional global financial system since the Ukraine invasion, including the ban on Russian banks from using the SWIFT global messaging system. Visa and Mastercard have likewise suspended operations in Russia, with local cardholders merely using the country's National Payment Card System.
