Coinbase Blocks 25,000 Russia Accounts To ‘Support’ Sanctions

According to Coinbase, 25,000 wallet addresses linked to Russian people and organizations engaging in criminal activity have been blacklisted.

“Proactive” investigations by Coinbase’s Chief Legal Officer Paul Grewal found many of these accounts, he wrote in a blog post on Monday. As a response to Russia’s invasion of Ukraine, it has taken this step, the exchange stated. To “better help sanctions enforcement,” the US government received the addresses.

“Sanctions play a vital role in promoting national security and deterring unlawful aggression, and Coinbase fully supports these efforts by government authorities,” the post said.

Cryptocurrency exchange coinbase said in a blog post that when a user opens an account, it checks the information provided against a list of sanctioned individuals or entities provided by countries such as the United States, the United Kingdom, and the European Union. It also blocks users from sanctioned areas like Crimea, North Korea, and Iran.

In a tweet on Wednesday, Coinbase CEO Brian Armstrong said his company didn’t think there was a “high risk” of Russian oligarchs using cryptocurrency to evade sanctions.

“Because it is an open ledger, trying to sneak lots of money through crypto would be more traceable than using US dollars cash, art, gold, or other assets,” Armstrong said.

Exchanges in the US and overseas have agreed to execute sanctions rules but have refused to prohibit Russians based on their nationality.

After weeks of encirclement and warnings from US intelligence, the Russian troops entered Ukrainian territory on Feb. 24. The conflict has triggered a humanitarian disaster and prompted harsh Western condemnation, including crippling sanctions on Russia.

Coinbase said it is proactively preventing access to sanctioned actors during new user signups by checking accounts against a sanctioned list. The exchange said it detects attempts to avoid punishment by updating its screening list.

According to Coinbase, the most popular method of evading sanctions is through the use of fiat currency, which is laundered through the traditional banking system. This included Iran, which uses shell companies to manipulate the banking system and avoid sanctions.

“An entire money laundering industry has emerged to hide assets in ordinary fiat currency using these techniques,” the exchange said.

Unlike traditional financial transactions, crypto and digital asset transactions are “traceable, permanent, and public,” increasing Coinbase’s capacity to “detect and deter” evasion.

In 2020, the Electronic Frontier Foundation criticized Coinbase for how it handles requests from law authorities for consumers’ financial data.

“We believe we can balance these interests by continuing to support law enforcement efforts while promoting policy frameworks that respect individual privacy,” Coinbase said.

Noor Qureshi

Experienced Founder with a demonstrated history of working in the computer software industry. Skilled in Network Security and Information Security.

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