Crypto exchanges won’t cut off Russian customers

Ukrainian Deputy Prime Minister Mykhailo Fedorov asked cryptocurrency exchanges to block the addresses of their Russian users last weekend. noted: “It is crucial not only to freeze addresses linked to Russian and Belarusian politicians, but also to sabotage ordinary users” following the Russian invasion.

For the executives of some of the major cryptocurrency exchanges, that Feb. 27 call was a step too far.

Changpeng “CZ” Zhao, the billionaire CEO of the world’s largest crypto exchange, Binance, said cutting off all Russian citizens would be “unethical”.

Brian Armstrong, CEO of US-based public cryptocurrency exchange Coinbase, Explain on Twitter that “ordinary Russians are using crypto as a lifeline now that their currency has crashed. Many of them probably oppose what their country is doing, and a ban would hurt them too.

He added, “We believe that everyone deserves access to basic financial services unless otherwise required by law.”

Both answers miss the point – Fedorov’s goal was to increase pressure on Russian President Vladimir Putin’s regime – and highlight the moral absolutism of much of the crypto community in the world. old school, epitomized perfectly by Kraken CEO Jesse Powell’s response.

Calling Bitcoin “the embodiment of libertarian values, which strongly promote individualism and human rights” in a February 27 TweeterPowell compared the moral dilemma to the order to freeze exchange accounts that was part of Canada’s crackdown on protesters in Ottowa last month, saying “crypto was the only financial rail left for those who opposed the regime”.

Referring to the Ukrainian request later in his Twitter feed, Powell added“People’s money is an exit strategy for humans, a weapon for peace, not war.”

Armstrong, whose current Twitter bio reads in part, “Creating more economic freedom in the world,” added, “We believe that everyone deserves access to basic financial services, unless otherwise provided by law. law”.

This raises a valid point: the US, EU and other countries that sanction Russia have focused their formal sanctions on banks and other companies run by oligarchs supporting the Putin regime. Measures to cut access to SWIFT financial messaging at the heart of international financial transactions have therefore affected seven major banks, but not all.

The crypto community was also quick to embrace the cause of Ukraine’s fight against the Russian invasion, with words and donations – including Binance, which donated $10 million in crypto on February 28, four days after the launch of the Russian invasion.

A total of $56.2 million in crypto was sent to the Ukrainian government and an NGO providing support to the military, blockchain intelligence firm Elliptic reported today (March 4). This included a non-fungible Ukrainian flag token that fetched the government $6.5 million at auction, $5.8 million in DOT tokens from Polkadot blockchain founder Gavin Wood, and $250,000 from FTX CEO Exchange, Sam Bankman-Fried.

The Moral Calculation

There is no doubt that the sanctions against Russia are causing more economic hardship for the average citizen who will have to tighten their belts than for the oligarchs whose $600 million yachts are seized. And it will only intensify as the US, EU and other countries extend these sanctions beyond the banks and businesses controlled by the oligarchs enriched by the Putin regime.

Even Switzerland is taking sides, announcing on February 28 that it is breaking with a centuries-old policy of neutrality to freeze the bank accounts and assets of Russians and countries targeted by sanctions.

Beyond that, it is important to note that modern sanctions, even when much broader like those against Iran, are not the starved blockades that date back at least to the Peloponnesian War (431-404 Before Christ). Modern sanctions, at least by democratic nations, are quick to specify that basic foods, medicine and humanitarian supplies are excluded.

There are other places where the rubber of libertarian crypto ideology hits the road of reality, including the fairy tale that mixes services and privacy coins that deliberately obfuscate bitcoin and other crypto transactions. cryptocurrency are for people who just want to keep their privacy intact. They must avoid government surveillance. When this darkness helps people living under a dictatorship or an enemy occupation, it is good. When it helps drug dealers and human traffickers hide both their illicit funds and the evidence of their crimes, it’s bad.

See also: PYMNTS Crypto Crime Series: When privacy matters, crypto users turn to mixing services

Armstrong’s stance isn’t too surprising either: He stood firm in the face of widespread negative press when he told employees in fall 2020 that the company institutes a policy of political neutrality when employees tell him. asked to support Black Lives Matter at its peak, going so far as to offer a generous severance package to anyone who disagreed, leading to a reported exodus of at least 60 staff.

As for Powell, his Twitter feed’s final comment on the issue of blocking Russian accounts was: would be to freeze all US accounts. In practice, it’s not really a viable business option for us.



On: Forty-two percent of US consumers are more likely to open accounts with financial institutions that facilitate automatic sharing of their bank details upon sign-up. The PYMNTS study Account opening and loan management in the digital environmentsurveyed 2,300 consumers to explore how FIs can leverage open banking to engage customers and create a better account opening experience.