has said it has blocked over 25,000 addresses related to Russian individuals or entities believed to be engaged in illicit activity.
The exchange added that these accounts were identified through its own "proactive investigations" and that the addresses have been shared with the U.S. government to "further support sanctions enforcement."
"In the past few weeks, governments around the world have imposed a range of sanctions on individuals and territories in response to Russia's invasion of Ukraine. Sanctions play a vital role in promoting national security and deterring unlawful aggression, and Coinbase fully supports these efforts by government authorities," Coinbase's Chief Legal Officer Paul Grewal said in a blog post today.
Coinbase's approach to Russian sanctions
Grewal's blog post says Coinbase aims to play its part in supporting the "critical economic sanctions" levied against Russian individuals and entities amid the invasion of Ukraine.
To provide this support, the exchange said it is taking steps to block access to sanctioned actors, detect attempts at sanctions evasion, and anticipate threats. This involves procedures that include checking potential customers against lists of sanctioned individuals or entities and tracking IP addresses belonging to sanctioned parts of the world, like North Korea.
A Coinbase spokesperson told Decrypt last week that the exchange is working with industry-leading threat intelligence vendors that focus on monitoring emerging risks across the globe.
Grewal's blog post also makes the case for crypto technology enhancing sanctions compliance efforts.
According to Coinbase, "digital assets have properties that naturally deter common approaches to sanctions evasion."
https://t.co/h08YXYgAoM Sanctions play a vital role in promoting national security and deterring unlawful aggression, and @coinbase fully supports these efforts by government authorities. They are best placed to decide when, where, and how to apply them.
— Paul Grewal (@iampaulgrewal) March 7, 2022
These properties reportedly include the public nature of blockchains, which "offer unprecedented visibility into the details of transactions."
Coinbase also took the time to highlight the traceability of blockchain systems and the fact that transactions are permanent and immutable once they are recorded on a blockchain.
"In addition to these technical advantages, adoption of digital assets is still nascent, making their use for widespread sanctions evasion—the kind that robs sanctions of their impact—unlikely, a fact recently noted by a national security expert."
Can crypto be used to undermine sanctions?
There are several reasons why cryptocurrencies can be used to evade economic sanctions—a risk the United States Treasury explored in this report published last October.
One such example is ransomware.
Former FBI agent and current Director of Threat Intelligence at Abnormal Security, Crane Hassold, recently told Decrypt that cryptocurrencies were the "primary factor" in today's Russia-led ransomware industry.
"[Cryptocurrency] essentially allows the overall ransomware payments that we've previously seen to scale to numbers that are pretty crazy," he said.
According to Chainalysis research, roughly three-quarters of last year's global ransomware revenue went to sources likely affiliated with Russia. Previous research conducted by the United Nations also found that North Korea part-financed its nuclear and ballistic missile programs using cryptocurrencies.
Then there's mining, an industry which President Putin previously said Russia has a "competitive advantage.".
What's more, there is always the risk of sanctioned individuals and entities turning to non-compliant crypto exchanges, something which Russia-affiliated criminals have done in the past.
"We've seen instances before of crypto asset exchange services that were complicit in enabling Russia-based criminals to launder large amounts of money…one was called SUEX," said David Carlisle, Director of Policy and Regulatory Affairs at blockchain analytics firm Elliptic during a recent online webinar.