Binance has severed ties with five Russian banks facing sanctions, ceasing their function as transfer options for ruble transactions on the exchange’s peer-to-peer service.
On August 22, The Wall Street Journal (WSJ) called out Binance for listing sanctioned Russian financial institutions, including Tinkoff and Rosbank, as payment alternatives.
Such an association sparked apprehensions of possible sanctions breaches, with Binance seemingly supporting these banks.
The coverage underscored Binance’s operational links within Russia, suggesting potential infractions of sanctions in the wake of the Russia-Ukraine dispute.
The US Justice Department had been probing Binance for potential sanctions violations, hinting at unsanctioned access provided to Russian nationals.
The report further highlighted external figures indicating robust ruble trading activity on Binance.
WSJ underscored Binance’s role in facilitating peer-to-peer exchanges from rubles to digital assets, particularly with banks facing Western sanctions, referencing user-shared screenshots and conversation snippets.
Contrarily, Binance countered these claims. A representative declared the company had no ties with any Russian banking institutions.
“Binance is steadfast in adhering to international sanctions regulations and bars individuals, groups, entities, and nations that are internationally blacklisted from accessing the Binance platform,” the firm asserted.
On August 23, multiple local news outlets noted that Binance had delisted these banks from its payment options.
Yet, they reappeared under cryptic labels – “yellow” represented the sanctioned Tinkoff bank, while “green” was a proxy for the sanctioned Rosbank.
The Wall Street Journal, in its article dated August 25, confirmed the removal of the sanctioned banks from Binance’s list.
A Binance representative quoted in the WSJ report stated that the decision to remove was a reaction to revelations that users were leveraging the platform to skirt around sanctions.
“When we’re alerted to vulnerabilities, our approach is to rectify and address them promptly. In keeping with our consistent policies, any payment methods on the Binance P2P platform that don’t align with our compliance standards are rendered inaccessible,” remarked the Binance spokesperson.
Binance’s Legal Challenges Amidst International Sanctions and Russian Cryptocurrency Circumvention
Binance has faced a series of legal challenges throughout the year.
The US Securities and Exchange Commission (SEC) has taken legal action against the exchange, accusing Binance of neglecting to comply with federal securities regulations.
A key contention is Binance’s alleged role in assisting Russians in making international fund transfers, which puts the platform in a precarious legal position.
By February, in response to Russia’s activities in the Ukraine conflict, the European Council had levied sanctions on Russian banks, including Tinkoff and Rosbank, as part of its 10th round of sanctions.
Similarly, the US followed suit in May, imposing sanctions on Tinkoff. Along with Tinkoff, other entities such as Loko Bank, Solidarnost Bank, St. Petersburg Social Commercial Bank (PSKB), and Unistream Bank—which manages a payment system under the same moniker—were added to the SDN list.
Sanctions imposed on Russia strictly forbid the transfer of rubles from Russian entities, sanctioned or otherwise, to international bank accounts or for converting into other currencies.
Reacting to these financial constraints set by Western nations, Russia pivoted to the realm of cryptocurrencies.
To sidestep these sanctions, many Russians adopted a strategy that involved converting rubles into stablecoins. These stablecoins were subsequently exchanged for traditional fiat currencies.
The WSJ spotlighted the role of Binance, a leading cryptocurrency platform, as a top choice for such transactions within the region.
The WSJ’s findings revealed that, from October 2022 to March 2023, Binance’s peer-to-peer services facilitated transactions for Russians amounting to a substantial $428 million per month.
