Ali Raza
Two of the largest cryptocurrency exchanges are not taking any measures to ensure that Russian banks sanctioned by the West are not interacting with their platforms. The Huobi and KuCoin exchanges reportedly allow users to trade cryptocurrencies using debit cards issued by sanctioned Russian banks.
Huobi and Kucoin violate Western sanctions against Russia
Huobi and KuCoin are some of the largest cryptocurrency exchanges globally. A report by blockchain analytics firm Inca Digital said that the two exchanges allowed traders to use debit cards issued by Sberbank and other Russian banks sanctioned because of the Ukraine invasion.
The two exchanges do not directly accept funds from the sanctioned banks. Instead, they allow crypto traders to use their peer-to-peer platforms to trade with each other with accounts belonging to the sanctioned banks. According to the CEO of Inca, Adam Zarazinski, KuCoin, and Huobi were directly violating US and European sanctions by exploiting a loophole.
“Tether is frequently used by Russians to move money out of the country. It is absolutely used by these two exchanges in particular to provide crypto banking services to sanctioned Russian banks,” Zarazinski said.
The CEO of KuCoin, Johnny Lyu, has reportedly refuted these claims, saying that the exchange does not support withdrawals and deposits facilitated using cards issued by sanctioned Russian banks.
Crypto mogul Justin Sun, a Huobi Global Advisory Board member, has not addressed these claims. Nevertheless, the report comes when Huobi positions itself as one of the most compliant exchanges as it seeks licensing in Hong Kong.
Exciting news! Huobi is stoked about Hong Kong's pro-crypto policies & we're working hard to secure our crypto license there. Our aim is to be one of the first fully compliant exchanges in HK & collaborate with our Asia-Pacific users to drive digital asset growth! #Huobi #Crypto pic.twitter.com/ktZw1WE2cs
— Huobi (@HuobiGlobal) February 20, 2023
Binance and ByBit are also under criticism
The report has also mentioned the world’s largest exchange by trading volumes, Binance. Binance currently dominates more than 50% of the global crypto spot market. According to the Inca report, Binance facilitated Russians with multiple ways of converting local currency into cryptocurrencies using its over-the-counter trading desk and a peer-to-peer platform.
The Binance exchange has refuted these claims, stressing that it has KYC regulations. The exchange has also added that it has covered any loopholes that could be potentially exploited by filtering communication between users to ensure they cannot communicate with Russian entities.
The report has also accused the ByBit exchange of allowing users to convert the Russian ruble into crypto using fiat deposits and its peer-to-peer marketplace. Russians can also reportedly buy crypto on ByBit by depositing Russian rubles using an online digital wallet and locally issued cards.
The report comes as the Russia-Ukraine war marks its first anniversary. During the onset of the war, crypto exchanges were urged to bar Russian users from their platforms. While there was initial opposition from some crypto executives arguing that the crypto industry was decentralized, the majority ended up complying with the sanctions.
1/6 I understand the rationale for this request but, despite my deep respect for the Ukrainian people, @krakenfx cannot freeze the accounts of our Russian clients without a legal requirement to do so.
Russians should be aware that such a requirement could be imminent. #NYKNYC https://t.co/bMRrJzgF8N
— Jesse Powell (@jespow) February 28, 2022
Inca Digital has said it will release the entire report. However, the content highlights the concerns earlier shared by several US policymakers, including Senator Elizabeth Warren. The Senator even introduced a bill to ensure sanctioned Russian individuals and entities do not use crypto to evade sanctions.
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This article was written for Business 2 Community by Ali Raza.
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