Aug 22, 2023

According to a new report from the Wall Street Journal, Binance is helping blacklisted Russian lenders move money through peer-to-peer transactions.

Video transcript

We're talking about finance now having potentially further issues heaped upon it, the world's largest crypto exchange by volume alleged to have been serving folks in Russia despite a whole raft of financial sanctions relating to the war in Ukraine. This one, you know, could significantly harm Binance in the long run. But this report is now out saying that they have relationships with Russian customers and that is potentially an issue. Should Binance want to remain in good standing the world over. So let's talk about this one. I'm gonna throw it straight to Jen, what stood out to you uh from this report. Well, if you read the report, um there's this, uh Russian business woman probably like halfway in the report who says that most people in Russia are familiar with Cryptocurrency and use Cryptocurrency. And I think the quote was everyone except her grandma. And I think when we look at these Western sanctions, it's obvious to see why so many people in Russia are looking at cryptocurrencies and using it to change their rubles into absolutely anything else. And so yes, there are Western sanctions in Russia, but there are people who live there just like you and me who need money to do things. And so I can understand why Russians are looking for ways to change their fiat currency into crypto. Now, when we look at Binance, it's like probably the website is not available in Russia, but probably there are Russian people who have found to circumvent this. There was another Wall Street Journal article that came out earlier this month that spoke about China. Another, well, there's not sanctions for China but crypto is just illegal in China. Um and it talked about how China has this $90 billion market market for Binance. Obviously, the website is not available. But the Wall Street Journal viewed documents that showed uh Chinese users how to circumvent some of the things in place so that they would be able to use Binance. And so I am just waiting for more information here. It is a wait and see story for me if, if Binance is outwardly outwardly showing people in a sanctioned jurisdiction how to use their, take their currency and change it into crypto. I think that they are definitely going to run into issues with the regulators, but I'm just waiting to see if Binance responds to this. Um more than what they've already said. Well, yeah, I think like the centerpiece of this is the peer to peer nature of what they're talking about here. Like the the peer to peer exchange of uh crypto assets and Russian citizens of course, who have no involvement with the war? Why should they be penalized for this? Well, it, because the Russian citizens and like the banking system that they were using beforehand is being pressurized and squeezed from all sides. And so those Russian citizens are sort of caught in like this, in between zone. So crypto is a natural outlet for them. I think it shows you the promise of crypto very shortly just with, with that war going on. Uh interesting to get a thought from Binance on this. They told us a spokesman for Binance told the journal the exchange follows the global sanction rules, but they did not return a comment of request from Coindesk itself. I think this story just sort of follows up though in the eyes of politicians and regulators out there in line with the SEC and the CFCC and others who are pushing against finance right now. Uh There's many open investigations and cases and lawsuits against finance for their involvement in so many different aspects of the Cryptocurrency market, get from securities to working within the United States or other jurisdictions without licenses. And now you can just add to this list, this open look into what's happening with people possibly using their platform for exchanging assets uh in a country that right now is sanctioned by the global West. Now, the the question here, Jen is like, not necessarily like, is this a wait and see but more of like what is the reaction from politicians? Like, are they going to be, uh, are they gonna wait and see or are they just gonna make a decision and start going for it? And I could see them actually start pushing, especially on Capitol Hill if we continue to see more issues with the crypto and more bear market pressures and scams finance is a pretty easy target. Uh, just because of the nature of its global business. Throw back to you, Jeff. Yeah, I'm I'm with you. There will, I think you have Russia News, Binance evading Western sanctions. And then just a few weeks earlier, you have China News. I think that those are two things that I would be surprised if we didn't hear regulators talking about what's going on, especially given what's happening with Bin. So I, I'm right with you, Zach. What do you think? Yeah, quite risky for Binance, right. Should this stuff, uh you know, prove to be sort of demonstrably true. This is based on some analysis that I think the journal enlisted from outside, you know, uh Blockchain sleuths, right? So, you know, should this be uh a significant thing? This would be quite damning, I think as it relates to how the US uh regulatory apparatus is kind of crack trying to crack down on Binance. So, um certainly, certainly would be a growing uh like list of pains that c is facing at the helm of bin. Um you know, from the, the stuff that we talk about all the time, from, you know, hopping from jurisdiction to jurisdiction to, again helping those uh who uh the financial system would, would, uh, would not like to be served with the financial options that are available to, to other people like this. This is a, this is a pretty big one. So, um interesting to see what the, what the more full response is from Binance. as noted. They've been pretty mum on the issue. Um, yeah, any final thoughts on this one, will any history corner, you want to get a history corner with us on this one? History cor will be good. I mean, there's some great journalism from coin desk on this. In the past. We've talked about the movements of funds between the Chinese and Russian border with tether. I think that comes to play here and then over the summer as well, there was a lot of, uh, interesting disputes are back and forth with some senior people at Binance, uh leaving the firm and then there's, of course, like the layoff of about 1000 people. So Binance has certainly had a Rocky 2023 but hard to pinpoint a crypto company that has not had a Rocky 2023.

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