Leading cryptocurrency exchange announced its decision to discontinue offering its peer-to-peer service to five banks in Russia over concerns about violations of sanctions. The exchange’s decision to stop offering the service for ruble fund transfers comes after Binance drew flak from the Wall Street Journal for reportedly offering sanctioned banks like Rosbank and Tinkoff as its transfer options. The criticism sparked concerns about potential sanction violations as Binance had endorsed these banks as payment partners.
In a report on August 22, 2023, WSJ had shed light on Binance’s operations in Russia which could potentially violate sanctions imposed on the country in the wake of its ongoing conflict with Ukraine. The news website also cited external data that suggested sizable ruble-dominated trade volumes on the Binance platform. Launched in 2017, Biancne is a leading trading exchange platform for the most popular cryptocurrencies.
The US Department of Justice is currently investigating if Binance has breached any sanctions while alleging that it granted unauthorized access to its Russian customers.
WSJ has stressed Binance’s involvement with sanctioned Russian banks by sharing screenshots and chat messages of users of its ruble-to-digital asset service. Binance, on the other hand, has denied the allegations and maintained that it does not have any affiliation with any Russian bank. The company stated that it follows the global sanctions guidelines and enforces them on individuals, companies, entities, and nations that are “blacklisted” by the global community. On August 23, 2023, multiple news reports claimed that Binance had removed the five sanctioned banks from its payment method.
At the same time, there were also reports claiming that the payment methods had resurfaced on the platform using code words, like “green” for Rosbank and “yellow” for Tinkoff.
Two days later after its initial report, the WSJ published another news report claiming that sanctioned banks have indeed been taken off Binance’s list. A Binance spokesperson claimed that the move to remove the sanctioned banks from the platform came after the exchange realized that its account holders were using its peer-to-peer service for allegedly bypassing the sanctions imposed on Russia.
The spokesperson said when loopholes were pointed out, the platform tried to address the challenge as soon as possible.
The cryptocurrency market has largely remained unaffected by Biannce’s decisions. However, analysts feel that they need to track cryptocurrency charts for a bit longer to gauge the move’s impact on the crypto industry.
Incidentally, it’s not the first time that Binance has run into trouble over regulatory guidelines in the past year. In June earlier this year, the US Securities and Exchange Commission filed a lawsuit against Binance and accused it of violating federal security laws. The SEC had also accused Binance of helping Russian citizens to transfer funds abroad, which added to the exchange’s legal troubles.
In February, the European Council introduced sanctions on banks in Russia as part of its 10th set of sanctions against the country in view of its war with Ukraine. The US government also followed suit and in May it imposed sanctions on Tinkoff and four other Russian banks to its Specially Designated Nationals and Blocked Persons list. The four banks included the St. Petersburg Social Commercial Bank (PSKB), Loko Bank, and Solidarnost Bank.
The sanctions imposed against Russia bar any kind of Ruble transfer from a Russian entity to a foreign bank account or for the purpose of currency conversion. Eager to find a way out of the West’s sanctions, Russia gravitated towards cryptocurrencies.
In the aftermath of the sanctions, Russians started exchanging their Rubles for stablecoins, which can be converted into other fiat currencies. WSJ also highlighted that Binance was a popular choice for such transactions in Russia. Between October 2022 and March 2023, Binance’s peer-to-peer services helped Russian citizens process trades worth $428 million every month, according to the WSJ.
Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
