Crypto exchanges allow sanctioned Russian banks to transact: report

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According to a report by digital asset data analytics firm Inca Digital, two major crypto exchanges are still allowing customers of sanctioned Russian banks to transact on their platforms.

Huobi and KuCoin allow people to trade crypto using debit cards issued by sanctioned Russian banks like Sberbank, according to the report. Inca Digital chief executive Adam Zarazinski said in an interview on Friday that it could be a violation of US and EU sanctions and that the transactions often involve Tether, a stablecoin that has come under its own scrutiny by regulators.

“Tether is frequently used by Russians to transfer money out of the country,” he said. “It is absolutely used by these two exchanges, especially to provide crypto banking services to sanctioned Russian banks.”

Officials from KuCoin and the Binance exchange, also featured prominently in the report, disputed these claims. Huobi adviser Justin Sun did not respond to requests for comment on the report. KuCoin, Huobi, and Binance all started at the start of the Asian crypto boom.

Tether representatives also did not immediately respond to a separate request for comment.

“KuCoin does not support the withdrawal and deposit of cards issued by Russian banks,” KuCoin CEO Johnny Lyu said through a representative. “As a registered exchange in Seychelles, we follow the laws and regulations of Seychelles. We also follow the laws and regulations of other countries. If there are any suspicious transactions that need to be investigated, we cooperate voluntarily.”

Binance, the world’s largest cryptocurrency exchange, offers “several methods for Russians to convert local currency into crypto,” including through their over-the-counter trading desk and a peer-to-peer marketplace, according to the report. Each of these options is open to Russians without know-your-customer checks up to $10,000, according to the report.

Chagri Poyraz, Binance’s Global Head of Sanctions, said in a statement to Bloomberg News that the exchange is “a comprehensive KYC platform and was the first major exchange to implement the crypto-related sanctions of the EU”.

“There will always be users with bad intentions who will try to circumvent even the most advanced controls and that’s why we’ve gone above and beyond to respond in this dynamic environment,” Poyraz said. “Our P2P team takes the extraordinary added step of filtering any form of communication between users to ensure there is absolutely no potential connection to Russian entities through a workaround. Account Given the low value and low volume of P2P transactions, it is impractical to evade sanctions with these products, and now we have rebuffed even the most creative attempts to circumvent these controls.”

Binance, which said it does not have a centralized headquarters, has come under investigation over the numbers around the world. In the United States, Binance has been questioned by the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Department of Justice, and the Internal Revenue Service.

Zarazinski said the Inca plans to release the report soon, noting that it is the first anniversary of the Russian invasion of Ukraine. The report included other troubling observations about the 62 crypto exchanges it analyzed, including that some of them do not require Russians to pass KYC checks.

“We want crypto to not only survive everything that’s happened recently, but thrive,” he said. “But we also want to ward off bad actors and grow the industry responsibly.”

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