In response to concerns over potential sanctions violations, Binance has terminated its peer-to-peer fund transfer service involving rubles with five sanctioned Russian banks.
The Wall Street Journal (WSJ) raised concerns on August 22 about Binance offering transfer options with sanctioned institutions such as Tinkoff and Rosbank. This scrutiny pointed out the possible implications for Binance in light of the ongoing Russia-Ukraine conflict.
The US Justice Department has been probing Binance over potential sanctions violations, suspecting unauthorized access for Russian users.
Binance reportedly had significant ruble transaction volumes, and the WSJ cited user screenshots and messages to highlight the exchange’s P2P ruble-to-crypto trades, especially involving sanctioned banks.
“Binance follows the global sanctions rules and enforces sanctions on people, organizations, entities, and countries that have been blacklisted by the international community, denying such actors access to the Binance platform,” the company said.
Local reports on August 23 noted that Binance had eliminated these banks as payment options. Yet, these banks seemingly returned under coded names: “yellow” for Tinkoff and “green” for Rosbank. However, by August 25, WSJ reported that they had been delisted again.
Addressing this, a Binance representative stated that the removal came after realizing users were exploiting the service to sidestep sanctions. “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,” remarked the spokesperson.
Binance’s Regulatory Struggles Amid Sanction Concerns and Russian Crypto Usage
Binance has been navigating a minefield of legal challenges this year. The US SEC lodged a complaint against the exchange, alleging violations of federal securities regulations. Central to this is Binance’s potential role in facilitating fund transfers for Russians, a contentious legal issue given international sanctions.
In February, the European Council sanctioned Russian banks, including Tinkoff and Rosbank, due to Russia’s activities in Ukraine. The US followed suit in May, adding Tinkoff, Loko Bank, Solidarnost Bank, St. Petersburg Social Commercial Bank (PSKB), and Unistream Bank to the SDN list.
These sanctions restrict ruble transfers from Russian bodies to foreign accounts or for foreign exchange.
As a workaround to these sanctions, many in Russia began using cryptocurrencies, swapping rubles for stablecoins and then converting them into traditional currencies.
WSJ underscored Binance’s prominence in this space, stating that from October 2022 to March 2023, Binance’s P2P services facilitated $428 million in trades per month for Russian users.
