Changpeng ‘CZ’ Zhao said on Wednesday that it was “immoral” for Binance to approve all Russian citizens.
The Binance CEO said that avoiding sanctions is not a “crypto-specific problem”, dismissing pressure to block Russian customers from using the Binance platform. Changpeng ‘CZ’ Zhao said in a recent interview with Bloomberg that the company has complied with orders from international governments to impose limits on accepted customers. CZ said it was “immoral” to extend the sanctions to all Russian citizens. Crypto firms follow the same rules as banks.
CZ stressed that Binance follows the ban requirements very strictly. “Anyone who is on the sanctions list will not be able to use our platform; Those who are not, they can,” Zhao said on Wednesday, March 2, 2022. “It is not our decision to freeze user accounts. Facebook hasn’t banned Russian users. Google has not banned Russian users. Google hasn’t shut down Russia. America hasn’t done that.”
All approved Russians are banned
President Joe Biden was reportedly recently discussing sanctions with crypto exchanges, his role as a means for Russians to evade sanctions is the subject of recent headlines.
In response to a call by Ukraine’s deputy prime minister on Sunday to block crypto exchange accounts of Russians, Kraken CEO Jesse Powell said that while he respects Ukrainian citizens, all Russians should use the platform without legal basis. It is not appropriate to ban from use. A Binance spokesperson also pointed out that taking such action would “expose” everything crypto, the most important of which is censorship resistance. Coinbase has also declined to block Russians who are not the target of sanctions. CZ echoed similar ethical concerns, “Also, from a moral point of view, many Russians do not support war, so we must separate politicians from ordinary people.” Conversely, a Ukrainian NFT exchange said they had severed all ties with Russia and its neighbor Belarus.
While crypto markets are not regulated, regulators in the US and EU are looking to strengthen security measures in light of Russia’s recent invasion of Ukraine. Zhao said Binance conducts extensive user verification checks, ensuring that accepted addresses cannot transact on its platform. All crypto exchanges are subject to the same money laundering regulations as banks, adding an additional safety net. It should also be remembered that all transactions are pseudonymous only. Wallet addresses can be linked to individuals through forensic methods.
Crypto has liquidity issues
The statement that Russia can use crypto to evade sanctions has some flaws, the biggest being liquidity problems. Finding cryptocurrency exchanges to buy large amounts of cryptocurrency is not easy. The maximum liquidity of a ruble-to-bitcoin trading pair is $200K at any one time on the world’s largest exchanges. This is far from the $50B that passes through Russia on a daily basis, so moving large amounts of crypto to replace it is trivial and highly unlikely.
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