Top Crypto Exchanges That Refused to Suspend Russian Users
Crypto exists to provide greater financial freedom without restrictions from centralized financial sanctions. Russia’s invasion of Ukraine has projected the crypto exchange industry into the limelight.
In a tweet on Sunday, March 6th, the Ukraine vice prime minister Mykhailo Fedorov, backed by Russian and Belarusian politicians, asked the world’s leading crypto exchanges to block the addresses of all Russian users and the people of Belarus from access to their accounts. He said, “I’m asking all major crypto exchanges to block addresses of Russian users.
It’s crucial to freeze not only the addresses linked to Russian and Belarusian politicians but also to sabotage ordinary users.”
– Mykhailo Federov Twitter account
The crypto industry rejected the request for a blanket ban unless it became a legal requirement. However, until international government mandates sanctioned users with defined sanctioned rules, the major cryptocurrency exchanges will not block Russian users or freeze Russian accounts.
“We are not going to unilaterally freeze millions of innocent users’ accounts” — unilaterally banning users “would fly in the face of the reason why crypto exists.”
– A spokesman for Binance, the world’s largest cryptocurrency exchange, told to CNBC
Cryptocurrency – A Tool For All
Generally, cryptocurrency exchanges embrace libertarian values, aiming to provide greater financial freedom to people across the globe, not to sabotage ordinary users by banning all Russian accounts. Financial sanctions are happening as many governments try to pressure Russian banks. Throughout the crisis, the crypto industry continues providing opportunities for greater financial freedom for its users.
A tweet from Jesse Powell, CEO of Kraken, sums up the consensus from the top crypto exchanges.
This post delves into four of the world’s leading cryptocurrency exchanges, Binance, Coinbase, Kraken, and KuCoin. Find out what influenced their decision to refuse to freeze Russian users’ accounts other than sanctioned individuals.
The Crypto Exchanges that Refused to Ignore Bitcoin’s Founding Principles
Binance – the world’s Largest Cryptocurrency exchange
- CEO – Changpeng Zhao
- Founded in 2017
- High trading volume
- Based in the Cayman Islands
- Over 28.5 million users
- Global across 140+ countries
- 24/7 customer support
- More than 1,650 markets and over 400 coins
Coinbase – Best Crypto Exchange for Beginners
- CEO – Brian Armstrong
- Founded in 2012
- Good trading volume
- San Francisco based
- Over 89 million users
- Global across 100+ countries
- 24/7 customer support
- Over 480 markets and 160+ coins
Kraken – Best Crypto exchange for Longevity
- CEO – Jesse Powell
- Founded in 2011
- Good trading volume
- Based in the United States
- Over 6 million users
- Global across 190+ countries
- 24/7 customer support
- 450+ markets and 130+ coins
KuCoin – Best Crypto Exchange for Range of Fiat Currencies
- Co-founder & CEO – Johnny Lyu
- Founded in 2017
- Good trading volume
- Singapore based
- Originally co-founded in 2013 by COO Eric Don & marketing director Jack Zhu
- Over 10 million users
- Global across 200+ countries & 19+ languages
- 24/7 customer support
- Over 1,190 markets & 600+ coins
Let’s take a deep dive into the crypto exchanges that rejected Mykhailo Fedorov’s request.
Binance – the world’s Largest Cryptocurrency exchange
Binance Holdings has a broad range of digital assets, and Trust Wallet is one of the most popular digital wallets.
In 2021, Binance rapidly increased hiring staff for its compliance division after regulators globally issued warnings to consumers about the exchange activities. As CEO of Binance Holdings Ltd, the world’s largest cryptocurrency exchange, Changpeng Zhao states that Binance complies with the international government mandates by restricting only sanctioned individuals.
During a Bloomberg TV interview, Changpeng Zhao said, “It’s not our decision to make to freeze user accounts. Facebook hasn’t banned Russian users. Google has not blocked off Russia. The U.S. hasn’t done that.”
“Also, on an ethical point of view, many Russians don’t support the war, so we should separate the politicians from the normal people.”
However, on March 8th, 2022, Mastercard and Visa forced a decision upon Binance, who announced on the website, “Due to recent decisions by Visa and Mastercard – all transactions initiated with Mastercard and Visa cards issued in Russia will be unavailable on Binance. In addition, all transactions initiated with Mastercard and Visa cards by financial institutions outside of Russia will also be unavailable within the Russian Federation on Binance.”
Though the decision of Mastercard and Visa will create challenges and likely affect all crypto exchanges, Russian users can still deposit and trade with cryptocurrencies.
Coinbase – Best Crypto Exchange for Beginners
Coinbase is one of the top crypto exchanges, loved by beginners, advanced traders, and investors alike for its user-friendly interface.
On March 4th, 2022, Brian Armstrong, Coinbase CEO, said in a Tweet, “Some ordinary Russians are using crypto as a lifeline now that their currency has collapsed. Many of them likely oppose what their country is doing, and a ban would hurt them, too. That said, if the U.S. government decides to impose a ban, we will, of course, follow those laws.”
“Sanctions are a complex issue, and the situation is changing fast, so we’ll keep working with law enforcement and governments and will take more steps as needed. We’ll also, of course, keep working to enable crypto services for the people of Ukraine who are in need of help.”
On March 6th 2022, on the Coinbase blog, Paul Grewal, Chief Legal Officer, made a statement announcing that “Today, Coinbase blocks over 25,000 addresses related to Russian individuals or entities we believe to be engaging in illicit activity, many of which we have identified through our own proactive investigations.“
The blog post outlined the intention of Coinbase to:
- Block access to sanctioned actors
- Detect attempts at evasion
- Anticipate threats
Under the heading of “Anticipate threats,” Paul Grewal added a further note, “This figure isn’t specific to the time period since the invasion of Ukraine, most of these addresses we identified prior to the invasion, and we have not seen a surge in sanctions evasion activity in the post-invasion context.”
Brian Armstrong appears not to be backtracking on his March 4th decision. Coinbase still supports Russian digital wallet addresses for users unless targeted by sanctions or previously identified users.
Kraken – Best Crypto exchange for Longevity
In 2014, cyber thieves hacked into the Mt Gox Bitcoin exchange and looted $460 million Bitcoin. Kraken was the cryptocurrency exchange selected to support the investigation. Known for trustworthiness, Kraken managed the entire claim process and had difficulty distributing Mt Gox’s remaining few assets to creditors.
Kraken is a fully regulated cryptocurrency exchange that puts clients first. At a press conference, Jesse Powell, Kraken CEO, said he was “very humbled for the opportunity to help the community like this.” He also said, “It’s Kraken’s philosophy to always put the clients’ best interests first, and this is a philosophy that we will carry with us through supporting the trustee.”
Now, under different circumstances, Jesse Powell chose to deny the request of vice prime minister Mykhailo to freeze accounts unless it becomes a legal requirement. Libertarian values underpin cryptocurrencies, and as one of the major crypto exchanges, Kraken remains true to its ethics to support users.
In a Twitter thread, Jesse Powell reiterated Kraken’s stance regarding his decision: –
“Our mission at Kraken is to bridge individual humans out of the legacy financial system and bring them into the world of crypto, where arbitrary lines on maps no longer matter, where they don’t have to worry about being caught in broad, indiscriminate wealth confiscation.
“Sometimes, the hardest thing about having power is knowing when not to use it. Our mission is better served by focusing on individual needs above those of any government or political faction. The People’s Money is an exit strategy for humans, a weapon for peace, not for war.”
“Besides, if we were going to voluntarily freeze financial accounts of residents of countries unjustly attacking and provoking violence around the world, step 1 would be to freeze all U.S. accounts. As a practical matter, that’s not really a viable business option for us.”
– Jesse Powell reiterated Kraken’s stance regarding his decision in a Twitter thread.
KuCoin – Best Crypto Exchange for Range of Fiat Currencies
Known as the “People’s Exchange,” KuCoin’s website states that 1 in 4 crypto users are registered with KuCoin. With an impressive asset class of over 600 digital assets and more than 1,900 markets, it’s an excellent platform for members seeking greater financial freedom.
KuCoin is a popular cryptocurrency platform with credible transparency. Unfortunately, in November 2020, hackers stole $280 million of digital assets from the KuCoin exchange. Thankfully, KuCoin miraculously recovered the missing funds.
The young CEO, Johnny Lyu, believes in transparency and made a statement regarding the cyberattack on Yahoo Finance. He said, “As the People’s Exchange, we believe our customers deserve to know the truth. The incident has already happened, so we cannot ignore the elephant in the room. Instead of covering it up, our choice was to face it and solve it. And only if we solved it properly could we move on with our community. As an exchange serving 6 million users worldwide, we did what we were supposed to do to handle the incident, protect our users and their funds.”
On discussing KuCoin’s upgraded security, Lyu added, “The saying “what does not kill you makes you stronger” resonates with us. I believe that KuCoin today is stronger than we have ever been.”
True to the core values mentioned above, KuCoin will not ban Russian users unless sanctions explicitly target individuals or entities.
Johnny Lyu stated his reasons for not banning Russian users. He said, “As a neutral platform, we will not freeze the accounts of any users from any country without a legal requirement. And at this difficult time, actions that increase the tension to impact the rights of innocent people should not be encouraged.” – CNBC website.
Conclusion
As the world pressures the Russian economy, the United States Treasury Department issued a press release on March 4th 2022. The headline said, “Treasury Sanctions Russians Bankrolling Putin and Russia-backed Influence Actors.“
The subheading further confirmed, “The United States and its Partners and Allies Continue Campaign Against Putin’s Affiliates in Response to the Premeditated and Unprovoked Invasion of Ukraine.”
The major crypto exchanges agree to compliance only if targeted by sanctions. However, with the Binance announcement of the ban on Russian debit and credit cards by Mastercard and Visa, trading on the major exchanges in Russia may become problematic. Though Russian users can continue using cryptocurrencies, it may only be a matter of time before an outright ban on the availability of crypto exchanges to Russia becomes legal.
As Jesse Powell, Kraken CEO, says in his tweet regarding legal sanctions, “Russians should be aware that such a requirement could be imminent.”
