Russian Oligarchs Unlikely to Use Crypto to Dodge Sanctions – Coinbase CEO

Binance Coinbase Exchange Kraken Regulation Russia

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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October 23, 2023 09:11 EDT

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The heads of some of the world’s biggest centralized crypto exchanges (CEXes) have hit back against critics who claim crypto could be used by Russian oligarchs attempting to evade Western sanctions. However, the exchanges will abide by the law in case there’s a ban on all Russian users. 

On Twitter, Coinbase CEO Brian Armstrong wrote that “it would be a mistake to think crypto businesses like Coinbase won’t follow the law.” 

“This is why we screen people who sign up for our services against global watchlists and block transactions from IP addresses that might belong to sanctioned individuals or entities, just like any other regulated financial services business,” he said.

But, the CEO added, oligarchs were not likely to use a large CEX to move their funds around. He wrote:

“We don’t think there’s a high risk of Russian oligarchs using crypto to avoid sanctions. Because it is an open ledger, trying to sneak lots of money through crypto would be more traceable than using United States dollars cash, art, gold, or other assets.”

7/ In addition, we are not preemptively banning all Russians from using Coinbase. We believe everyone deserves access to basic financial services unless the law says otherwise.

— Brian Armstrong (@brian_armstrong) March 4, 2022

However, Armstrong stressed that if the US government decides to impose a ban on ordinary Russians, the exchange “will of course follow those laws.”

“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,” the CEO said, adding that the company will “keep working to enable crypto services for the people of Ukraine who are in need of help.” 

The head of Coinbase rival Binance, Changpeng “CZ” Zhao, affirmed comments made earlier this week by the Binance Chief Communications Officer Patrick Hilmann, who claimed that the exchange would abide by sanctions, but “to unilaterally […] cut off access to crypto across a wide array of a population” would be “ethically outside the bounds of what a platform should do.” 

In an interview with Bloomberg, Zhao said that Binance had already complied with international government mandates to restrict sanctioned individuals. But, he said, going any further than this would be “unethical.” He, like Armstrong, noted that the crypto sector abides by the “same rules” as banks.

Zhao said that Binance “follows sanctions rules very strictly” and “it’s not our decision to make to freeze user accounts.”

Zhao added that American tech firms such as Facebook and Google had not banned Russian users, and added that a blanket ban on Russian users risked tarring all Russians with the same brush. 

“From an ethical point of view, many Russians don’t support the war. So we should separate the politicians from the normal people,” he said. In February, over 70% of surveyed Russians approved activities of their president Vladimir Putin, per Statista.