Crypto Exchanges Heed Ukraine’s Call to Freeze Russians Bitcoin

As the West continues to impose more sanctions on Russian banks after the Russian invasion of Ukraine, a Ukrainian official has also called for sanctions against the Russians’ cryptocurrency holdings.

Mykhailo Fedorov, Ukraine’s Minister of Digital Transformation, took to Twitter on Sunday to urge global cryptocurrency exchanges to block addresses of Russian users.

He stressed that exchanges should not only freeze the addresses officially linked to Russia and Belarus, but also “sabotage ordinary users”.

Fedorov next be aware that some industry-related services have already moved to freeze assets from Russia and Belarus, including the non-replaceable token platform DMarket.

“Funds from these accounts can be donated to the war effort. Today Robin Hood. Bravo,” said Fedorov. he too quoted the ongoing measures taken by social media giant Meta in relation to the Russian attack on Ukraine.

Fedorov’s calls could be potentially catastrophic for the Russian cryptocurrency market, as Russians were estimated to hold more than $200 billion worth of crypto in early February.

As the Russian ruble has fallen sharply against the US dollar and the euro, Russians have increasingly cashed out their bank deposits and apparently considered crypto investments. As such, BestChange, a major crypto exchange aggregator in Russia, has seen a 20% increase in visits after the Russian invasion of Ukraine, a company spokesperson told Coin-Crypto.

Leaving Russia could also be disastrous for major global exchanges like Binance as the Russian market is apparently Binance’s second largest market after Turkey in terms of website traffic.

Binance Doesn’t Freeze Bitcoin From Russians

Binance does not intend to freeze assets of Russians as it would violate key cryptocurrency financial freedom principles, a company spokesperson told Coin-Crypto on Monday:

“We are not going to unilaterally freeze the accounts of millions of innocent users. Crypto is meant to give people around the world greater financial freedom.”

The representative added that the exchange is taking steps to ensure sanctions are imposed on sanctioned entities in Russia, while “minimizing the impact on innocent users”. “If the international community further expands those sanctions, we will also apply them aggressively,” the spokesman added.

Some crypto executives believe that sanctions against Russia are ultimately inevitable. However, they should only target selected individuals, as the US Office of Foreign Assets Control usually does.

“We think the sanctions will be inevitable with the naming of new sanctioned individuals as US/OFAC has done in the past. However, it wouldn’t make sense to ban all crypto companies from providing services to ordinary Russians and would do more harm than good to ordinary people,” LocalBitcoin’s chief marketing officer Jukka Blomberg told Coin-Crypto.

Kraken CEO Jesse Powell also said that the Kraken exchange cannot freeze the accounts of the exchange’s Russian customers without a legal requirement. “Russians should be aware that such a demand could be imminent,” he added. powell before recommended Kraken users to remove their crypto assets from the exchanges, citing Canada’s emergency law freezing dissidents’ crypto.

The law had prompted crypto firms to freeze Bitcoin (BTC) wallets in mid-February over local anti-vaccination protests.

While it remains to be seen whether other crypto exchanges choose to freeze Russia’s crypto assets, many crypto companies have been actively working to support Ukrainian refugees and soldiers.

On Sunday, Binance launched Ukraine Emergency Relief Fund to provide emergency relief through crypto crowdfunding. The crypto exchange also donated $10 million to help the humanitarian crisis in Ukraine.

Related: Ukraine Accepts Bitcoin, Ethereum, and USDT Donations Amid Ongoing War

Crypto payment processor CoinGate has also launched a similar initiative, opening a special fundraising account to support the Ukrainian Armed Forces. The fundraiser aims to enable users to donate in more than 70 cryptocurrencies, with the money going directly to the National Bank of Ukraine.

Local crypto exchanges are also responding quickly, with Ukraine’s Kuna exchange launching a crypto fund last Thursday to help charities help the military and state resist the Russian invasion.

According to Coin-Crypto’s estimates, Ukraine has raised more than $23 million in crypto since the launch of several donation campaigns.

On Sunday, the office of the Russian Attorney General warned Russians that any aid to a foreign country during the period of the “special operation to protect the DPR and LPR” will be considered treason against the mother country, a crime punishable by up to 20 years in prison.

Additional coverage by Coin-Crypto writer Zhiyuan Sun.

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