There are reports that Russian oligarchs and others are trying to move their money around to avoid the crippling economic sanctions that have been levied on the country, in response to the invasion of the Ukraine.
One of the ways to “hide” financial assets and evade the sanctions is to put their rubles, which have been crushed, into cryptocurrencies at various cryptocurrency exchanges. These trading platforms enable the buying, selling, holding and trading of digital assets, such as bitcoin and Ethereum. This would also be a way for Russian President Vladimir Putin and his inner circle to get their vast fortunes out of the traditional banking system.
Since the United Kingdom, European Union, United States, Canada and other countries kicked Russian banks from SWIFT, the primary international global payments messaging system used by banks, the country needs access to capital to supply the war and keep its economy alive.
After Russia waged war against Ukraine on February 24, transactions on bitcoin exchanges, in both the Russian ruble and the Ukrainian hryvnia, surged. On Wednesday, bitcoin increased to $44,188 after falling to $36,370 last week. Other leading digital assets, including Ethereum, Ripple and Solana, stayed about even or had modest gains. The ruble dramatically plummeted to record lows, against the dollar, to under one U.S. cent.
U.S. regulators and law enforcement officials are looking into this matter and enhancing their efforts to combat the possible use of cryptocurrencies to evade sanctions, according to the Associated Press. However, not all crypto exchanges are on board, and said they won’t shut out Russian accounts. To be fair, why should the average citizen, who is already subjugated under a tyrant, be adversely impacted? Also, the exchanges claim that one of the major reasons why people purchase crypto is to get out of the banking system and the clutches of big governments.
It will be up to compliance and regulatory personnel to ensure that the sanctions are enforced. These professionals review data and accounts of the people and companies that are on the sanctions list. They do this by conducting a Know-Your-Customer review when they onboard new clients and review existing customers.
Mykhailo Fedorov, vice prime minister of Ukraine and minister of digital transformation of Ukraine, praised the crypto community for their financial support, tweeting, “Massive support from crypto projects @solana @SolanaFndn and @everstake_pool, which set up a joint initiative @_AidForUkraine in collaboration with our @mintsyfra to raise funds for @Ukraine.”
He also called for the blocking of oligarchs to hide their money through purchasing digital assets.
Binance, the world’s largest crypto exchange, said in a statement, “We are not going to unilaterally freeze millions of innocent users’ accounts. Crypto is meant to provide greater financial freedom for people across the globe. To unilaterally decide to ban people’s access to their crypto would fly in the face of the reason why crypto exists.” The exchange did say that it will freeze the crypto accounts of Russian officials who are on sanctions lists, Reuters reported.
Kraken, a large crypto platform, said it won’t close Russian accounts unless the company is legally forced to do so, CEO Jesse Powell said via Twitter. Powell tweeted, “Our mission at Kraken is to bridge individual humans out of the legacy financial system and bring them into the world of crypto, where arbitrary lines on maps no longer matter, where they don’t have to worry about being caught in broad, indiscriminate wealth confiscation.”