South Korean crypto exchanges have joined Switzerland in targeting Russian account holders by blocking Russian Internet Protocol (IP) addresses.
Exchanges Gopax, Upbit, Bithumb, Coinone, and Korbit have placed restrictions on Russian addresses, barred customers in high-risk money-laundering countries based on the South Korean Financial Action Task Force principles, and prevented Russian account holders from liquidating their crypto holdings.
Gopax was the first exchange in South Korea to reveal on Thursday that it was blocking IP addresses from Russia and freezing 20 Russian accounts, according to sanctions imposed by the Office of Foreign Assets Control (OFAC) in the U.S. and the European Union. Upbit, the biggest exchange in South Korea with respect to transaction volume, said it would begin refusing withdrawals by Russian IP addresses.
The pressure is building on sanctioned Russians
Pressure is mounting on Russian users, as Singapore and Switzerland followed suit with crypto sanctions.
Singapore recently announced sanctions against Russia, including prohibiting the export of goods that could cause Ukrainians harm or help Russia launch cyber attacks. Singaporean financial institutions are banned from doing business with VTB Bank Public Joint Stock Company, The Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank, Promsvyazbank Public Joint Stock Company, and Bank Rossiya. This last ban includes restricting Russian cryptocurrency transactions attempting to bypass international sanctions.
Switzerland’s federal government also imposed measures to freeze crypto assets owned by Russian individuals and businesses within the alpine nation’s borders. This came hot on the heels of four European Union sanctions imposed by Brussels on Wednesday. “We are taking measures, in particular on crypto assets which should not be used to circumvent the financial sanctions decided upon by the 27 EU countries,” said French Finance Minister Bruno Le Maire.
Meanwhile, the Japanese are considering suspending transactions with Russia.
Exchanges are walking a tightrope
Binance, Coinbase, FTX, and Kraken have so far taken a hard line against blanket restrictions on Russian users, with Kraken CEO Jesse Powell saying that a legal basis would be required to block all Russian users from accessing crypto on Kraken.
In late Feb. 2022, American officials implored major exchanges like Coinbase and FTX Trading Ltd. to target accounts of sanctioned entities. A Binance spokesperson said of a total ban on Russian users that such action goes against the censorship-resistant nature of cryptocurrencies. However, the exchange has identified crypto wallets belonging to sanctioned individuals., agreeing to act speedily against those users should the need arise.
FTX is reportedly consulting with Bahamian and American officials on the best course of action.
Coinbase said it is blocking transactions involving addresses identified by OFAC as prohibited.
Binance CEO, Changpeng “CZ” Zhao has allayed fears that the Kremlin could use the cryptocurrency to dodge sanctions, claiming that “crypto is too small for Russia.” CZ highlighted that cryptocurrencies’ inherent traceability thwarts the ability to evade sanctions. “Governments around the world are already very adept at tracking it,” Zhao said. Furthermore, only 3% of the world’s population own some crypto, and less than 10% of their net worth is locked up in crypto. Even privacy currencies like Monero have too small a market capitalization compared with the Gross Domestic Product of Russia. Monero has a market capitalization of $3B, while the Russian GDP is $1.5T.
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