Russia-Ukraine war: Binance shuts crypto accounts tied to kin of top Russian officials

The biggest cryptocurrency exchange, Binance Holdings Ltd. on Saturday blocked numerous accounts owned by relatives of officials in Russian President Vladimir Putin's government. The step comes amid the mounting wave of international sanctions slapped against Russia due to its military onslaught in Ukraine. The Bitcoin trading platform has informed that it will continue to locate account holders associated with sanctioned Russian government individuals or diplomats.

Among the notable persons affected by the decision of the largest cryptocurrency exchange company (in terms of trading) included the stepdaughters of Russian Foreign Minister Sergei Lavrov and Kremlin spokesperson Dmitry Peskov, Polina Kovaleva and Elizaveta Peskov respectively. Peskova was blocked on March 3, when she tried using the exchange through a third-party brokerage. In the following week she was slapped with sanctions by the US Treasury Department, Bloomberg reported. Expressing outrage over the situation, Peskova said that she was "surprised" to see sanctions imposed on a "24-year-old who has nothing to do" with the war.

The Vancouver-based company has also blocked Kirill Malofeev, son of Russian oligarch Konstantin Malofeev, who has been accused by the US Treasury Department of spreading separatism in Crimea.

Taking to LinkedIn, Chagri Poyraz, the newly appointed global head of sanctions in the company asserted he is "proud to be a part of this team that makes a real difference." As of now, Binance has allotted a transaction cap on accounts of Russian nationals or residents. For such accounts, they have limited the on-account trading for those holding more than 10,000 Euros or $10,000. While the company will adhere to the EU-ordered sanctions, it will not "unilaterally freeze" millions of "innocent users'" accounts, Binance's CEO was quoted by Bloomberg as saying.

Will Russia resort to crypto transactions to evade sanctions?

The Russian war against Ukraine has led the West, including the EU to slap sanctions on the economic and financial sectors of Russia, effectively dropping the rate of the ruble. In such a situation, it is likely for Moscow to resort to digital payment modes, especially cryptocurrency for trade and payments. However, analysts have suggested that unregulated cryptocurrencies do not provide viable loopholes to evade West-led sanctions. Although enforcement mechanisms used by financial institutions to monitor transactions aren't always available, there are laws requiring to verify transactions from accounts where sanctions have been issued, experts say.

“As with the traditional financial system, Russia can leverage cryptocurrency to evade the sanctions that are being put in place in response to their invasion of Ukraine. And as in the traditional financial system, the cryptocurrency ecosystem can put measures in place to identify transactions from identified sanctioned entities," explains Caroline Malcolm, the head of international public policy for Chainalysis, as quoted by Sky News. Malcolm further stated that even if Russia relies on unfaithful transactions, they will be recorded in blockchain permanently, allowing easy detection for enforcement purposes.

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