Although at first, Coinbase is an American company that operates a cryptocurrency exchange platform. had opposed the blocking of Russian wallets, now announced that it does so but only with addresses identified with illicit activities.
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Coinbase the San Francisco-based crypto trading platform, which offers exchange services between cryptocurrencies and fiat currencies in around 32 countries, as well as storage and management of digital assets in 190 countries, yesterday reported which supports and will be part of the sanctions imposed by governments around the world on Russia.
He published on his blog a statement expressing how he will implement his support for the sanctions. We translate part of the text:
“In recent weeks, governments around the world have imposed a series of sanctions on individuals and territories in response to Russia’s invasion of Ukraine. Sanctions play a vital role in promoting national security the term securities refers to a fungible and tradable financial instrument that carries a type of monetary value. and deterring unlawful aggression, and Coinbase fully supports these efforts by government authorities. Sanctions are serious interventions, and governments are in a better position to decide when, where and how to apply them.”
Coinbase Measures
Clarifies the exchange: “No compliance program is perfect, including ours. But to play our part in these critical economic sanctions, Coinbase implements a multi-tiered global sanctions program.”
Explain this program:
1.- Block access to sanctioned actors
During incorporation, Coinbase checks account applications against lists of sanctioned individuals or entities, including those maintained by the United States, the United Kingdom, the European Union, the United Nations, Singapore, Canada, and Japan.
“To open a Coinbase account, individuals and entities must provide identifying information, including their name and country of residence. We review this information through an independent provider before allowing a person to make a transaction. If a customer lives in a sanctioned country or region, or if they identify themselves as a sanctioned person or entity, they cannot open an account on our platform.”
“Similarly, we use geo-fencing controls to prevent access to the Coinbase website, as well as our products and services, by anyone using an IP address a place where cryptocurrency can be sent to and from, in the form of a string of letters and numbers. in a sanctioned geography (e.g., Crimea, North Korea, Syria and Iran). We routinely subject our sanctions compliance program to internal testing and independent third-party audits.”
2.- Detect evasion attempts
Coinbase dice que actualiza regularmente las listas de sanciones globales que usamos para la detección. “If someone opened a Coinbase account an account is essentially a whose purpose is to track the financial activities of a specific asset/ and then gets sanctioned, we use this ongoing screening process to identify that account and cancel it. Because sanction evaders often try to mask their identities, Coinbase also works proactively to map transactions beyond the entities and individuals specifically targeted by governments. This allows us to identify potentially related parties and block a file containing information on transactions completed during a given time period. Blocks are the constituent parts of a blockchain. accounts associated with prohibited actors.” .
3.- Anticipating threats
Coinbase explains that it maintains a sophisticated program for the analysis of Blockchain a distributed ledger system. A sequence of blocks, or units of digital information, stored consecutively in a public database. The basis for cryptocurrencies. to identify high-risk behaviors, study emerging threats, and develop new mitigations. “We have methods to identify accounts of sanctioned individuals outside of Coinbase, even if we don’t have direct access to their personal information. For example, when the U.S. sanctioned a Russian citizen in 2020, it specifically listed three associated blockchain addresses. Through advanced blockchain analytics, we proactively identified over 1200 additional addresses potentially associated with the sanctioned person, which we added to our internal blocklist. This is just one example.
Reveals the exchange businesses that allow customers to trade cryptocurrencies for fiat money or other cryptocurrencies. que “today, Coinbase blocks more than 25,000 addresses related to Russian individuals or entities that we believe are involved in illicit activities, many of which we have identified through our own proactive investigations. Once we identify these addresses, we share them with the government to further support the opposite of Resistance, it is a threshold that crypto’s price doesn’t fall below. sanctions enforcement.”
Fiat currency is more elusive
qel exchange stresses that the benefits of digital assets for sanctions enforcement extend beyond these initiatives.
“Digital assets have properties that naturally deter common approaches to sanctions evasion. Ordinary fiat fiat currency is “legal tender” backed by a central government, such as the Federal Reserve, and with its own banking system, such as fractional reserve banking. It can take the form of physical cash, or it can be represented electronically, such as with bank credit. currency currency is a medium of exchange that defines value. laundered through traditional financial institutions remains one of the most common mechanisms for sanctions evasion and money laundering. As the U.S. Treasury noted about sanctions against Iran, the ‘Iranian regime has long a situation where you buy a cryptocurrency with the expectation of selling it at a higher price for profit later. used shell and shell companies to exploit financial systems around the world’ to evade sanctions”.
Añade:
“An entire money laundering industry has emerged to hide assets in ordinary fiat currency using these techniques. By transacting through shell companies, incorporating in known tax havens, and taking advantage of opaque ownership structures, bad actors continue to use fiat currency to conceal the movement of funds. In doing so, they leave complex financial trails that are difficult to trace, requiring investigators to request separate information from many different financial institutions and follow a trail in multiple countries (some of which refuse to cooperate or take years to produce records).”
Traceable digital currency
On the contrary, it says Coinbase , digital asset transactions are traceable, permanent and public. “ As a result, digital digital technologies are these electronic tools that have the ability to generate, store or even process data. assets can improve our ability to detect and deter evasion compared to the traditional financial system.”
For example, it explains the exchange, the Russian government and other sanctioned actors would need virtually unattainable amounts of digital assets to meaningfully counteract current sanctions . “ The Russian central bank alone holds over USD $630 billion in largely immobilized reserve assets. That’s larger than the total market an area or arena, online or offline, in which commercial dealings are conducted. capitalization of all but one digital asset, and 5 to 10 times the total daily traded volume how much cryptocurrency has been traded over a set period, such as the past 24 hours. of all digital assets. As a result, trying to obscure large transactions using open and transparent cryptographic technology would be much more difficult than other established methods (e.g., using fiat, art, gold, or other assets).
Clarifies: “This is not to say that bad actors can’t try, but circumventing restrictions on this scale would require massive purchases that would be prohibitively expensive and detectable, as this buying activity would likely lead to price spikes. We are always working to build trust a trust is a fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary. in the cryptocurrency cryptocurrencies are digital currencies that use cryptographic technologies to secure their operation. industry.”
Asimismo, concluye: “These are just some of the ways in which industry best practices and crypto technology help support sanctions compliance. Of course, no traditional business or crypto can guarantee that its sanctions controls are completely airtight. Malicious individuals can find ways around even the strongest barriers.”
Add: “We believe we can support law enforcement efforts while promoting policy frameworks that respect individual privacy.”
Change change — a concept relevant to cryptocurrencies that use the UTXO model — is the number of coins sent back to a user after they use their unspent outputs to initiate a transaction. of mind
It is worth noting that the strong communiqué of Coinbase appears to contradict, at least partially, the position put forward last week, when it followed the line of other exchanges that said that would not block Russian accounts as called for by Ukrainian spokesmen. Their position at the time was that it would not punish all users of a nation. Now, as we see, it is more specific with the type of blocks.
In addition, the CEO of Coinbase Bryan Armstrong, had said last Friday that cryptocurrencies were serving as a safe haven for many Russian citizens, ordinary people, who were probably opposed to what their country’s authorities were doing.
Sources: Coinbase , Finbold , archivo
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