Exit Russian banks – It’s not good to be the Binance platform in the current crackdown on the cryptocurrency sector. This complex situation has led to a veritable exercise in regulatory origami on the part of the leader in centralized exchanges. And clearly, the figure targeted by this artistic folding seems to bear the name « compliance. » Indeed, this is the term used by its spokespersons in connection with its latest emblematic decision in the field. On the agenda: an expulsion – a little late – sanctioned Russian banks from its peer-to-peer service.
Is Binance violating sanctions against Russia?
The Binance platform is currently under fire from regulators. A very uncomfortable position for this exchange, identified as the undisputed leader in the cryptocurrency sector. Because success obviously comes with obligations that are not always accepted, especially when the structure involved is based in the centralized part of this ecosystem. And it’s not founder Changpeng Zhao (CZ) who will say otherwise…
A situation at the root of recent revelations made a few days ago by the Wall Street Journal (WSJ). This concerns the possible involvement of the Binance platform in a violation of international sanctions against Russia.
A dangerous game which it is said to have ventured into through its peer-to-peer trading service, enabling its Russian users to exchange rubles for cryptocurrencies via sanctioned banks.
The problem? Instead of immediately resolving this situation the Binance platform would have continued to offer this service in a roundabout way. Indeed, these operations would have remained available thanks to the use of code names to designate the sanctioned banks. A bad idea, given the ongoing investigation against him by the US Department of Justice (DOJ) since last May on the specific subject of a possible violation of US sanctions against Russia.
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Binance « working hard » to remedy the problem
According to Binance spokespersons, this processing delay does not call into question the company’s stated intention to « regularly update (its) systems to ensure compliance with local and global regulatory standards ». A statement accompanied by the suspension – this time manu militari – of the sanctioned Russian banks highlighted by the Wall Street Journal.
At the same time, the Binance platform is trying to play down the affair by simply referring to « reported shortcomings » which it would hasten to resolve once detected. All this while applying a strategy that consists, in its own words, of « striving to remedy them as quickly as possible. » It’s hard to believe, however, that this declaration of intent will be enough to calm the aggressive ambitions of the American justice system in this matter.
Binance announces its intention to « play by the rules ».
A recent case that will not go down well with the Binance platform. This in a context where some long-standing partners such as MasterCard seem to be on the verge of leaving this sinking ship. Because the attacks seem to come from all sides. Even though some destinations are still favorable such as El Salvador, which has just made Binance its first fully regulated exchange.
In any case, the Binance platform may well be reacting on the communication front. Just this morning, it published a lengthy statement on its X (formerly Twitter) account intervention of its General Manager Kyrylo Khomyakov, based in the Ukraine. Coincidence of timing? In any case, there is talk of the importance of KYC (Know Your Customer) in order to « play by the rules. »
« This is a mechanism by which banks, cryptocurrency exchanges and other players in the financial sector collect and analyze the identifying data of their customers. The aim is not only to ensure proper control of individuals, but also to prevent the financing of terrorism, money laundering and other types of illegal activity. »
Kyrylo Khomyakov
Does the Binance platform equate its recent Russian wanderings with the « other types of illegal activity » mentioned by its Ukrainian manager? Nothing could be further from the truth. However, this leading exchange is constantly bumping up against the limits imposed by regulators in order to control its development model. And it’s clear that further clashes are on the cards.
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