Crypto exchanges Huobi, KuCoin enabled Russian sanctions evasion. Binance also mentioned – Ledger Insights
Crypto intelligence firm Inca Digital published a report alleging that cryptocurrency, particularly the Tether stablecoin, has been used for Russian sanctions via cryptocurrency exchanges. It says Huobi and KuCoin allow transactions for their P2P platforms that use sanctioned Russian banks for deposits. It makes a similar claim about Binance, but sourced the data from “Digital Intelligence Resources in Russia” instead of directly.
Inca’s clients include the Department of Defense, the CFTC and Fidelity.
The main allegations relate to peer-to-peer (P2P) markets where the exchanges provide the platform instead of the core cryptocurrency exchanges.
According to Inca, Binance offers several methods for Russians to convert local currency to crypto, namely their exchange, OTC desk and a Peer to Peer (P2P) market. Each of these options is fully open to non-KYC (know your customer) Russians for up to $10,000 equivalent deposit amount, but can be easily bypassed after this amount.” It claims that transactions can be hidden by showing payments to non-Russian energy companies.
It confirms that Binance does not support Russian cards or sanctioned bank accounts for the primary crypto exchange. In a statement, Binance refuted the claims, saying it is a full-KYC platform.
Inca analyzed mentions of crypto exchanges in Russian social media. Shortly after the outbreak of the Ukraine war, the top mentions were Binance, KuCoin and Bybit, in that order. Binance’s share increased to around one-third by May 2022. From August to October, KuCoin led social media coverage before another Binance surge during November 2022.
Sanctions were initially imposed on larger crypto transactions after the outbreak of the Russia-Ukraine war – for wallets holding more than €10,000. In October 2022, Europe extended the sanctions to all crypto wallets, accounts and custody services, regardless of amount, to prevent local businesses from violating the sanctions.
There has been a lot of talk from the Russian government and even Putin about a desire to use crypto to avoid sanctions, but the Bank of Russia is not supportive. Instead, there is talk of using Russian digital financial assets – real-world tokenized assets – and the possibility of a cross-border CBDC. Reports indicate that work will begin on the sovereign digital currency for international payments in the current quarter.
