• 25,000 addresses associated with Russian entities have been blocked by Coinbase

  • Coinbase stated that it had blacklisted over 25,000 addresses associated with Russian persons and businesses suspected of “engaged in criminal behavior.”

    Coinbase Suspends Russian Accounts

    Coinbase says it is doing its share to comply with official limitations as global sanctions devastate the Russian economy.

    The firm’s Chief Legal Officer, Paul Grewal, stated in a blog post on Monday that it has blacklisted over 25,000 Russia-related addresses that it suspected of being tied to illicit activity. Here’s an example:

    “Today, Coinbase has blocked over 25,000 addresses associated with Russian persons or businesses that we suspect are participating in illegal activities, many of which we have found via our own proactive investigations.” We shared these addresses with the authorities after identifying them to help with sanctions enforcement.”

    Grewal went on to say that sanctions “have a key role in boosting national security,” and that the exchange supports government sanctions and has a “multi-layered” compliance policy in place. He explained how the exchange prevents sanctioned persons and companies from using Coinbase by scrutinizing account applications and limiting access to IP addresses in sanctioned nations. He went on to describe how the exchange has a “ongoing screening procedure” that assists it in detecting anyone attempting to circumvent sanctions and proactively anticipating threats using blockchain analytics technologies.

    In reaction to Russia’s onslaught on Ukraine, the United States and other countries across the world have slapped tough sanctions on the country in recent days. The West cut Russia off from the SWIFT payments network and froze the Bank of Russia’s abroad assets, leading the Ruble to drop 30 percent in a single day (Bitcoin surpassed the Ruble’s market size on Monday, lending credence to its “safe haven” value argument).

    Russia is facing sanctions and a currency collapse.

    Some cryptocurrency pundits believe the sanctions will cause the Russian government and elites associated with President Vladimir Putin to turn to cryptocurrencies such as Bitcoin. Grewal, on the other hand, disagreed with this assessment in his blog post, stating that the Bank of Russia has approximately $630 billion in reserve assets. Bitcoin is the sole crypto asset valued more than $630 billion now, accounting for more than one-third of the $1.8 trillion market cap. “The Russian government and other sanctioned entities would require virtually unattainable amounts of digital assets to meaningfully counteract current sanctions,” he wrote, adding that it would be difficult to conceal large transactions using crypto because there is always an open ledger that leaves a paper trail of every transaction. He explicitly mentioned art and gold as alternate storage mediums.

    Coinbase CEO Brian Armstrong expressed the same sentiment in a Twitter storm on Friday, claiming that he didn’t see Russian oligarchs adopting cryptocurrency anytime soon. “We do not believe there is a large possibility of Russian oligarchs using cryptocurrency to dodge sanctions,” he added. “Because it is an open ledger, attempting to steal large sums of money through cryptocurrency would be more traceable than using US dollars, cash, art, gold, or other valuables.”

    Coinbase would comply with the law, but would not prematurely restrict ordinary Russian users, according to Armstrong. Over the last several days, Coinbase and other major exchanges have faced requests to restrict Russian users as other corporations around the world break relations with the country, but most of the industry’s main players have resisted the pressure. Jesse Altman of Kraken and Changpeng Zhao of Binance have both stated their opposition to blanket restrictions on Russian crypto users, while Armstrong argued in his Friday Twitter storm that some Russians are using Coinbase “as a lifeline” in the midst of the country’s economic disaster.

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