Binance, the largest cryptocurrency exchange worldwide, has halted its peer-to-peer (P2P) service for customers utilizing five Russian banks that are currently subjected to international sanctions, as reported by The Wall Street Journal (WSJ).
In a statement, the exchange mentioned its regular updates to conform with both local and global regulatory standards and sanctions policies. Consequently, Binance eliminates any payment methods that do not align with their compliance guidelines.
The move comes after the WSJ report on August 22nd highlighting how Binance permitted users to trade cryptocurrencies in rubles through P2P transactions involving banks like Tinkoff and Rosbank—which are targeted by US and EU sanctions due to Russia’s role in the Ukraine conflict.
The report also claimed that volunteer members of Binance on Telegram channels actively promoted the use of P2P services as a means of bypassing Russian capital controls and transferring money overseas.
Binance’s P2P Service Under Scrutiny
Binance’s P2P service enables users to directly buy and sell cryptocurrencies from one another, bypassing the exchange’s main platform. This convenient feature offers various payment methods like bank transfers, e-wallets, and cash.
However, the exchange faced controversy when it came to light that some of the offered payment methods involved banks with connections to the Kremlin or involvement in illicit financial activities, which have been sanctioned by the West.
Initially, the exchange attempted to conceal these banks’ identities using color codes rather than their names. For example, “green local card” represented Sberbank while “yellow local card” referred to Tinkoff Bank.
Nevertheless, after this practice was exposed by The Wall Street Journal, Binance removed these banks from its P2P service on August 25th. Despite this change, WSJ reported that Binance users could still manually enter their details to use these banks if desired.
It is worth noting that the P2P service operates separately from its primary exchange service and has different policies for Russian users compared to other jurisdictions. Specifically, in April 2022, Binance imposed a €10,000 limit on Russian accounts, which was later lifted in April 2023.
Regulatory pressures from multiple countries, including the United States have led to investigations by the Justice Department and Commodity Futures Trading Commission regarding potential violations of anti-money laundering and sanctions laws.
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