- Binance banned Russian customers from trading USD or EUR in March 2023.
- The crypto behemoth confirmed new restrictions on Russian users on Telegram.
- The Justice Department has launched a probe on Binance for money laundering.
Binance, the globally leading cryptocurrency exchange, halted peer-to-peer (P2P) transactions via five sanctioned Russian banks. This comes just a week after the Wall Street Journal published an article blaming Binance for offering Russians a gateway to bypass the numerous sanctions implied by the United States and the European Union.
According to the Wall Street Journal, Binance has processed transfers totaling over $428 million via the P2P service, while the transactions involved Sberbank and Tinkoff Bank, two blacklisted banks headquartered in Russia. Meanwhile, Binance faces mounting regulatory issues in the United States, as the U.S. Securities and Exchange Commission (SEC) laid out 13 criminal charges against the company and its founder, Changpeng ‘CZ’ Zhao.
Peers Follow as Binance Takes Action
The unprecedented restriction by Binance means that rubles will be available for trading only for Russian citizens living in the country. Last week’s Wall Street Journal article tackled the issue of money laundering via an intermediary, which eventually enables citizens to convert the sanctioned funds into a legit balance on the crypto platform.
Addressing the latest restriction on Russian users, a Binance spokesperson pointed out: “When gaps are pointed out to us, we seek to address and remediate them as soon as possible.” Soon after the move, Binance’s competitors, like Bybit and OKX, took similar action to remove the five blacklisted Russian banks from their ecosystems.
The cautious measures come when most major exchanges fear the Office of Foreign Assets Control (OFAC), which will likely crack down on exchanges operating in the sanctioned aggressor state. According to lawyer Adam Cochran, the OFAC’s jurisdiction allows it to seize hot wallets, which would cause havoc across the crypto markets if put in action.
On The Flipside
- The original message by Binance on Telegram has caused immense backlash from the local crypto community.
- With over 700 comments, it’s clear that the most affected customers are the Russian citizens who live in foreign countries.
- The dissatisfied customers argue that they can’t convert their Rubles held in blacklisted banks into valid balances on Binance.
Why This Matters
Binance’s regulatory compliance lays the groundwork for CeFi platforms in the future.
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