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Coinbase says it's blocked 25,000 Russian accounts, as the crypto exchange steps up its efforts to stamp out illicit activity

Markets Insider logo Markets Insider 3/7/2022 insider@insider.com (Adam Morgan McCarthy)
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  • Coinbase said Monday it has blocked 25,000 crypto wallets belonging to Russian users linked to illicit activity.
  • The crypto exchange also said it will comply with sanctions in response to the Ukraine war.
  • Coinbase CEO said crypto is a lifeline for ordinary Russians and won't preemptively ban them.

Coinbase said on Monday it had blocked 25,000 accounts linked to Russian users that it said it believed were involved in illicit activity, and said it is stepping up its efforts to comply with Western restrictions on Russian finances over the country's invasion of Ukraine.

"Today, Coinbase blocks over 25,000 addresses related to Russian individuals or entities we believe to be engaging in illicit activity, many of which we have identified through our own proactive investigations," the company said. 

A Coinbase spokesperson said the decision to block those wallets had not been the direct result of Russia's invasion of Ukraine, but rather was part of a wider effort to combat fraudulent activity on the the exchange. 

"This figure pertains to all illicit activity we've proactively detected in Russia in recent years; it's not specific to the period since the invasion of Ukraine. We have not seen a surge in activity in the post-invasion context," the spokesperson said in an emailed response to Insider.

The San Francisco-based exchange said in a post on its website it would comply with all sanctions put forward by Western governments on Russia in response to its attack on Ukraine. 

"Sanctions play a vital role in promoting national security and deterring unlawful aggression, and Coinbase fully supports these efforts by government authorities," Coinbase said.

The post also welcomed public scrutiny into cryptocurrency as it believes that this plays a vital role in maintaining public confidence.

"We welcome public scrutiny of the crypto industry, and will continue working to enhance our overall compliance program and industry compliance standards," Paul Grewal, who is Coinbase's chief legal officer, said on Monday on the website.

Brian Armstrong, Coinbase CEO, said last week that cryptocurrencies had become a "lifeline" for ordinary Russians who are desperately trying to preserve their wealth as the value of their ruble currency collapses and the government in Moscow makes it harder to move cash out of the country.

Armstrong also rejected the idea that Coinbase could preemptively ban all Russian users.

As Russia's invasion of Ukraine escalated over the past week Western governments have imposed increasingly stringent measures to isolate Russia from the rest of the world through financial sanctions. 

Russia has been removed from SWIFT transfer, seen its stocks removed from global exchanges including London's stock exchange and had its credit rating downgraded to junk by major ratings agencies. 

The latest potential sanctions discussed by Western governments look at potentially cutting off imports of Russia oil and gas into Europe, one of the country's biggest exports.

Read more: Galaxy Digital's incoming deputy CEO helped build Google Chrome and founded a billion-dollar crypto custodian. He shares the 2 blockchain-based technologies he's watching — and explains why a 'crypto winter' might actually be beneficial.

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