Coinbase noted in a blog post its ongoing commitment to counter illegal dealings on its cryptocurrency exchange platform, but stopped short of banning Russian activity completely in the wake of the country’s military invasion of Ukraine.
The comments come after the U.S.-based cryptocurrency exchange, along with Cayman Islands-based Binance and other exchanges, resisted calls to ban all Russian individuals from their exchanges. Binance told CNBC last week that it would block accounts of sanctioned individuals, but would not “unilaterally” freeze all Russian users, as Ukraine’s vice prime minister requested from all major crypto exchanges a day before.
In a blog post Sunday, Coinbase chief legal officer Paul Grewal confirmed the company blocks over 25,000 addresses related to Russian individuals and entities due to illicit activity, noting that it was already blocking those addresses prior to the Ukrainian invasion.
The post also detailed how Coinbase implements its sanctions program by checking accounts against lists of sanctioned individuals and entities during onboarding using an independent vendor, and regularly updates the sanctions lists for screening to detect attempts at evasion.
Its sophisticated blockchain analytics program identifies high-risk behavior, Grewal wrote, and provided an example from 2020 where Coinbase identified over 1,200 addresses associated with a Russian national who was sanctioned by the United States. Grewal noted that Coinbase shares the addresses with the government.
Grewal also noted that digital assets can actually enhance sanctions since digital transactions are traceable, permanent and public.
“Public blockchains offer unprecedented visibility into the details of transactions, including information about the date and time of each transaction, the type of virtual asset transacted, the amount, the wallet addresses involved, and the unique transaction identifier," he wrote. "Suspicious transaction activity can be traced without needing to gather information from multiple financial institutions. These advantages for investigation and enforcement simply do not exist with cash transactions or transactions across multiple countries.”
On Feb. 24, U.S. President Joe Biden announced a new round of financial sanctions on the Russian government and said the United States was prepared to respond to cyberattacks against private industry and infrastructure if Russia retaliated.