South Korean cryptocurrency exchanges have joined Switzerland in restricting Russian Internet Protocol (IP) addresses in order to target Russian account holders.
Exchanges Gopax, Upbit, Bithumb, Coinone, and Korbit have restricted Russian addresses, excluded users from high-risk money-laundering countries according on the standards of the South Korean Financial Action Task Force, and prevented Russian account holders from liquidating their crypto assets.
According to penalties implemented by the Office of Foreign Assets Control (OFAC) in the United States and the European Union, Gopax was the first South Korean exchange to declare on Thursday that it was restricting IP addresses from Russia and freezing 20 Russian accounts. Upbit, South Korea’s largest exchange in terms of transaction volume, announced that it would begin denying withdrawals from Russian IP addresses.
The pressure on sanctioned Russians is increasing.
Russian users are under increasing pressure as Singapore and Switzerland impose crypto bans.
Singapore recently imposed restrictions on Russia, including a ban on the export of goods that could endanger Ukrainians or aid Russia in conducting cyber operations. Singaporean financial institutions are prohibited from conducting business with VTB Bank Public Joint Stock Company, Vnesheconombank, The Corporation Bank for Development and Foreign Economic Affairs, Promsvyazbank Public Joint Stock Company, and Bank Rossiya. This final restriction restricts Russian cryptocurrency transactions that aim to circumvent international sanctions.
Switzerland’s federal government recently adopted measures to freeze crypto assets owned by Russian individuals and firms within the borders of the alpine nation. This follows four European Union penalties issued by Brussels on Wednesday. “We are taking steps, particularly with regard to crypto assets, which should not be used to dodge the financial sanctions imposed by the EU’s 27 member states,” stated French Finance Minister Bruno Le Maire.
Meanwhile, Japan is considering suspending trade with Russia.
Exchanges are balancing on a tightrope.
Binance, Coinbase, FTX, and Kraken have all taken a firm stance against blanket limitations on Russian users, with Kraken CEO Jesse Powell stating that a legal foundation would be required to prevent all Russian users from accessing cryptocurrency on Kraken.
In late February 2022, American officials pleaded with key exchanges such as Coinbase and FTX Trading Ltd. to target accounts belonging to sanctioned companies. A representative for Binance stated that a comprehensive ban on Russian users goes against the censorship-resistant nature of cryptocurrencies. However, the exchange has identified crypto wallets belonging to sanctioned individuals and has agreed to take swift action against those users if necessary.
According to reports, FTX is working with Bahamian and American officials to determine the best course of action.
Coinbase has stated that it is blocking transactions involving addresses that have been designated as banned by OFAC.
Changpeng “CZ” Zhao, CEO of Binance, has allayed fears that the Kremlin may utilize cryptocurrency to avoid sanctions, arguing that “crypto is too little for Russia.” CZ emphasized that the intrinsic traceability of cryptocurrency makes it difficult to avoid punishment. “Governments all across the world are already quite good at tracking it,” Zhao says. Furthermore, barely 3% of the world’s population owns some cryptocurrency, and less than 10% of their net worth is invested in cryptocurrency. Even privacy currencies like Monero have too little a market value in comparison to Russia’s GDP. Monero has a market capitalization of $3 billion, while Russia’s GDP is $1.5 trillion.