Crypto Firm Will No Longer Serve Customers in Russia
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Crypto Firm Will No Longer Serve Customers in Russia

5 months ago

Exchanges are refusing to impose a blanket ban on all Russian consumers — a stance that has divided the crypto community.

Crypto Firm Will No Longer Serve Customers in Russia

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Blockchain gaming giant Animoca Brands has announced that it will no longer serve customers in Russia — becoming one of the first crypto firms to take action after Vladimir Putin's invasion of Ukraine.

Decentralized virtual world The Sandbox and a number of NFT-powered racing games are among the projects in Animoca's portfolio.

Animoca's stance is a marked departure from other crypto businesses, which are only restricting access to individuals or organizations who have been subject to economic sanctions by the West.

Speaking to Bloomberg, Animoca's co-founder Yat Siu explained:

"The legal advice we've been receiving is we now have to impose some restrictions. It's a sanctioned country on par with North Korea. The moment we end up doing business in those areas, we might ourselves become financially excluded from the financial system."

In recent days, Animoca subsidiaries including Gamee have announced that they will close entirely in Russia, while the NFT ecosystem Lympo is going to stop offering collectibles inspired by the country's athletes.

The Bloomberg report notes that Animoca makes use of intellectual property from global brands including Formula 1 and Disney — and this may have forced its hand.

Formula 1 has said that "it is impossible to hold the Russian Grand Prix in the current circumstances," while Disney is among a number of Hollywood movie studios that is going to stop releasing films in the country.

Exchanges Hold Their Ground

While a significant number of major brands have announced that they will no longer offer their services in Russia — with Apple halting product sales and Visa cutting off Russian banks from its network — crypto exchanges have courted controversy by adopting a different approach.

Over the weekend, Ukraine's Deputy Prime Minister Mykhalio Fedorov called on major trading platforms to block the addresses of Russian users, adding:

"It's crucial to freeze not only the addresses linked to Russian and Belarusian politicians, but also to sabotage ordinary users."

Coinbase is among those that has refused to honor a blanket ban — and instead says it will focus on "blocking accounts and transactions that may involve sanctioned individuals or entities." The exchange told VICE:

"Our mission is to increase economic freedom in the world. A unilateral and total ban would punish ordinary Russian citizens who are enduring historic currency destabilization as a result of their government’s aggression against a democratic neighbor."

And Jesse Powell, the co-founder and CEO of Kraken said that despite his "deep respect" for the people of Ukraine, his exchange cannot freeze the accounts of Russian clients without a legal requirement to do so. He also warned followers that blanket bans could be "imminent," adding:

"Bitcoin is the embodiment of libertarian values, which strongly favor individualism and human rights … Our mission at Kraken is to bridge individual humans out of the legacy financial system and bring them into the world of crypto, where arbitrary lines on maps no longer matter, where they don't have to worry about being caught in broad, indiscriminate wealth confiscation."

He went on to conclude his Twitter thread by saying:

"Besides, if we were going to voluntarily freeze financial accounts of residents of countries unjustly attacking and provoking violence around the world, step one would be to freeze all U.S. accounts. As a practical matter, that's not really a viable business option for us."

Powell, and executives from rival platforms, have been accused of putting profits before people. Others have warned that the lack of voluntary action from exchanges could prompt governments around the world to enforce even more aggressive regulation against digital assets.

There is division on this issue. While some of those responding to Powell's Twitter thread said his stance made them more likely to use Kraken, others warned that they would now be closing their accounts in protest.

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