Coinbase has decided to block 25,000 addresses related to Russian people who are thought to be engaged in illegal activities.
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Cryptocurrencies are in the public spotlight again because of the ongoing war between Russia and Ukraine. As Russia invades Ukraine, it has met multiple sanctions from various countries in the western world. Its currency continues to decline. As a result, many civilians and organizations in the country are using cryptocurrency to help them get through these financial times.
The Ruble lost more than half of its market value. Furthermore, the country has been removed from the global payment system SWIFT. Many prominent Russian citizens are on the US Sanctions List. The list prohibits American companies from engaging in business activities with these citizens.
As a result of the sanctions, Coinbase has blocked more than 25,000 crypto wallets that are linked to Russian entities.
According to Coinbase:
“Coinbase checks account applications against lists of sanctioned individuals or entities, including those maintained by the United States, United Kingdom, European Union, United Nations, Singapore, Canada, and Japan.”
The company stated that it screens the information through its independent vendor before the account can use the platform. If the account is linked in a sanctioned country, the customer can’t open an account on Coinbase. It also uses geofencing controls to prevent those individuals from accessing the website, as well as its products and services. Thus, if an IP address is coming from a sanctioned geography, like Crimea, Syria, Iran, and North Korea, it can’t use the platform.
Fiat currency is still the most convenient way to launder money. However, crypto is now being used by bad actors.
The company clarified that the blocked addresses are engaged in illegal activities. Many of them were identified through Coinbase’s protective investigations. The company also shared the addresses with the government to emphasize its commitment and support to the sanctions.
Three days ago, Coinbase CEO stated that “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. That said, if the US government decides to impose a ban, we will of course follow those laws.”
Indeed, the company clarified that the blocked wallets are linked with the sanctioned entities. It means that they are not ordinary Russian users. But the decision of Coinbase in blocking thousands of wallets is a reminder that cryptocurrencies could be decentralized. However, managing assets are not necessarily be decentralized.
Coinbase tried its best to follow implement rules that ensure they align with the sanctions. The platform also explains that the platform can’t escape the sanctions. Because Coinbase is an American company, it has to comply with US regulations.
Russia is now isolated from larger non-crypto companies. Visa and Mastercard announced that they have suspended their operations in the country. The decision left cardholders in Russia to depend on the country’s National Payment Card System. Paypal, too, suspended its services in Russia.