- Crypto exchange Coinbase says it has blocked over 25k Russian addresses linked to illicit dealings
- The exchange has submitted the idea of using crypto tech over traditional fiat to ensure sanctions compliance
In an official blog post published today, the largest crypto exchange in the US, Coinbase, has voiced its support for the range of sanctions placed against Russia. The exchange insisted that sanctions play a critical role in national security and dissuading unlawful aggression.
In the post, the exchange’s chief legal officer Paul Grewal acknowledged that while Coinbase’s compliance program might not be perfect, it is doing its bit in helping ensure compliance to imposed financial and economic penalties.
He explained that via its multi-layered, global sanctions program, Coinbase is able to prevent sanctioned parties from opening accounts on the exchange, anticipate threats from sanctioned actors using advanced blockchain analysis, and detect efforts to evade sanctions.
To that effect, the blog revealed that Coinbase has blocked over 25,000 addresses linked to Russians believed to be engaging in illegal activity. The exchange said it independently identified most of them via in-house investigations and shared the address with the US government.
Crypto over fiat
Grewal also highlighted the propensity of bad actors to choose fiat currencies to avoid sanctions as opposed to crypto. Basing his argument on this, he proposed using cryptocurrencies over traditional fiat to ensure compliance with economic sanctions.
The Coinbase executive explained that unlike digital assets, which can be traced (public blockchains), fiat is often used by individuals or nations such as Iran to skirt sanctions. He explained that bad actors can simply obscure their financial holdings by leveraging the weaknesses of fiat.
"By transacting through shell companies, incorporating in known tax havens, and leveraging opaque ownership structures, bad actors continue to use fiat currency to obscure the movement of funds. In this way, they leave complex financial trails that are difficult to trace…"
While in recent days, concerns have arisen on whether sanctioned Russian individuals could turn to cryptocurrencies to evade sanctions, Coinbase CEO Brian Armstrong thinks otherwise. In a Twitter thread last week, Armstrong said that it's unlikely that they can sneak in financial assets in large volumes without detection.
"That being said, we don't think there's a high risk of Russian oligarchs using crypto to avoid sanctions. Because it is an open ledger, trying to sneak lots of money through crypto would be more traceable than using USUS dollars cash, art, gold, or other assets," he wrote.