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Ukraine urges crypto exchanges to freeze Russian accounts

On February 27, 2022, Ukraine’s vice prime minister and minister of digital transformation Mykhailo Fedorov called on cryptocurrency exchanges to freeze Russian accounts via Twitter. He explained that it’s important for platforms to not only freeze the addresses linked to Russians and Belarusian politicians, but also to restrict ordinary accounts.

Fedorov has also announced that some exchanges have already followed suit, freezing digital assets from Belarus and Russia.

‘Received breaking news. @dmarket, a platform for trading NFT & In-game Metaverse items, decided to freeze the accounts of users from the Russian Federation and Belarus. Funds from these accounts could be donated to the war effort. Nowadays Robin Hoods. Bravo’, he said in a tweet.

However, Binance refuses to honour the sanction requested by Ukraine since this would oppose the financial freedom mainly linked to cryptocurrencies.

‘We are not going to unilaterally freeze millions of innocent users’ accounts. Crypto is meant to provide greater financial freedom for people across the globe. To unilaterally decide to ban people’s access to their crypto would fly in the face of the reason why crypto exists. However, we are taking the steps necessary to ensure we take action against those that have had sanctions levied against them while minimizing impact to innocent users’, the company explained. 

Binance is not the only exchange to decline the country’s plea of freezing Russians’ digital assets. Kraken CEO Jesse Powell also stated that an absence of legal requirement prevents them from blocking the addresses of its Russian clients.

‘Our mission is better served by focusing on individual needs above those of any government or political faction. Besides, if we were going to voluntarily freeze financial accounts of residents of countries unjustly attacking and provoking violence around the world, Step 1 would be to freeze all U.S. accounts. As a practical matter, that’s not really a viable business option for us’, Powell emphasized.

Following Fedorov’s calls for crypto sanctions against Russia, the effect could have negative repercussions for the Russian cryptocurrency sphere, housing approximately US$200,000,000,000 worth of crypto assets.

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