In response to mounting concerns and investigations, cryptocurrency exchange Binance has terminated its association with five Russian banks, including Tinkoff and Rosbank, on its peer-to-peer (P2P) platform for ruble fund transfers. This move follows criticism from The Wall Street Journal (WSJ) on August 22, which had raised questions about potential sanctions violations as Binance appeared to offer these sanctioned banks as legitimate payment options. The allegations stemmed from Binance’s operational ties in Russia, which had come under scrutiny, particularly in the context of the Russia-Ukraine conflict. The US Justice Department had initiated an investigation into Binance for potential sanctions breaches, alleging unauthorized access for Russian citizens. External data also suggested substantial ruble trade volumes on the platform.
The WSJ report underscored Binance’s involvement in peer-to-peer ruble-to-digital asset transactions, particularly with banks under Western sanctions, citing user screenshots and chat messages. However, Binance refuted these claims, asserting that it had no affiliations with any Russian bank, according to a company spokesperson. Binance emphasized its adherence to global sanctions regulations, which entails enforcing sanctions against individuals, organizations, entities, and countries blacklisted by the international community, thereby denying access to the Binance platform.
Local news outlets reported on August 23 that Binance had indeed removed the sanctioned banks from its payment options. However, they resurfaced using coded terms, with “yellow” representing the sanctioned bank Tinkoff and “green” symbolizing Rosbank. The WSJ’s August 25 report confirmed the removal of the sanctioned banks from Binance’s list. A Binance spokesperson explained that the removal was prompted by the discovery that account holders were utilizing the service to circumvent sanctions. The spokesperson stated, “When gaps are pointed out to us, we seek to address and remediate them as soon as possible. In line with our ongoing commitments, payment methods on the Binance P2P platform that do not fit our compliance policies are unavailable on our platform.”
Binance has encountered a series of legal challenges this year, including a lawsuit filed by the US Securities and Exchange Commission (SEC) alleging violations of federal securities laws. One issue raised in the lawsuit pertains to Binance’s role in assisting Russians in transferring funds overseas, contributing to the exchange’s complex legal situation. In February, the European Council imposed sanctions on Russian banks, including Tinkoff and Rosbank, as part of measures related to Russia’s actions in the Ukraine conflict. Similarly, the United States sanctioned Tinkoff in May, along with several other Russian banks. These sanctions prohibit ruble transfers from Russian entities, whether sanctioned or not, to foreign bank accounts or for currency conversion. In response to these sanctions, Russians turned to cryptocurrencies to bypass restrictions, exchanging rubles for stablecoins that are later converted into fiat currencies. The WSJ highlighted Binance as a preferred choice for such transactions, facilitating trades worth $428 million per month between October 2022 and March 2023.
