CEXs refuse blanket asset freeze of all Russian users, though questions linger

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Cen­tral­ized exchanges (CEX) and CEOs from com­pa­nies such as Binance, Coin­base and Krak­en have all stat­ed they would only freeze the assets of Russ­ian clients specif­i­cal­ly tar­get­ed by West­ern sanc­tions — not that of every­day Russ­ian users.

A few days pri­or, Mykhai­lo Fedorov, Ukraine’s min­is­ter of dig­i­tal trans­for­ma­tion, had called for “all major cryp­to exchanges to block [wal­let] address­es of Rus­sians” and “also to sab­o­tage ordi­nary users [by freez­ing their assets].” In explain­ing why he was not pre­emp­tive­ly ban­ning all Rus­sians (though, Coin­base is not avail­able in Rus­sia), Bri­an Arm­strong, CEO of Coin­base, specif­i­cal­ly wrote

“We believe every­one deserves access to basic finan­cial ser­vices unless the law says oth­er­wise. 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.”

How­ev­er, Arm­strong also said that “if the U.S. gov­ern­ment decides to impose a ban, we will of course fol­low those laws.” The sen­ti­ments of this state­ment were echoed by Krak­en CEO Jesse Pow­ell, who stat­ed

“Krak­en can­not freeze the accounts of our Russ­ian clients with­out a legal require­ment to do so. Rus­sians should be aware that such a require­ment could be imminent.”

Unsanc­tioned indi­vid­u­als appear to be feel­ing the effects of sanc­tions even so. The day pri­or, Binance announced that card­hold­ers of sanc­tioned Russ­ian banks would not be able to use them on its plat­form. On Fri­day, Red­di­tor u/Sammy12xyz raised the issue Iran­ian cryp­to enthu­si­asts face amid calls for CEXs to crackd own on Russ­ian cus­tomers, claim­ing

“It’s already hap­pened to Iran­ian accounts. We’ve been blocked out of Binance for two years, and no one’s said shit. Are we not innocent?”

Despite such sanc­tions, it appears there are sev­er­al, albeit lim­it­ed, ways to cir­cum­vent them. As one KuCoin mod­er­a­tor wrote:

“Users from Iran can use our exchange, but KYC [Know Your Cus­tomer] is not sup­port­ed. If you wish to pro­ceed with­out doing KYC, you may still per­form all func­tions on our exchange as nor­mal, even if you are not ver­i­fied. How­ev­er, there will be a with­draw­al lim­it of 5 BTC per 24 hours for unver­i­fied accounts.”

In addi­tion, CEX bans on Iran­ian IP address­es can be alleged­ly bypassed with VPNs. Although one Iran­ian cryp­to enthu­si­ast Coin­tele­graph spoke to claimed that cryp­tocur­ren­cies such as Bit­coin (BTC) are need­ed in the first place to pur­chase VPNs in Iran, as such ser­vices do not accept fiat pay­ments from Ira­ni­ans due to sanctions. 



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