The conflict between Russia and Ukraine has intensified, and encryption companies that advocate "decentralization" are facing a value test
Original Author: Kyle, Hive Tech
Crypto assets have played an important role in the Russia-Ukraine conflict. Not long ago, the Ukrainian side opened a donation channel for BTC, ETH and other encrypted assets, and has so far raised more than $37 million in encrypted assets. On the other hand, countries such as Ukraine have called on exchanges and other encryption companies to choose sides, calling on them to freeze the accounts of Russian users to prevent Russia from using encrypted assets to evade sanctions.
Ukrainian Deputy Prime Minister and Minister of Digital Transformation Mikhailo Fedorov recently emphasized on social media that not only the addresses related to Russian and Belarusian politicians should be frozen, but also the addresses of ordinary users.
Immediately afterwards, DMarket, a local Ukrainian game NFT trading platform, announced that it would freeze the accounts of Russian and Belarusian users, which means that the assets of these account owners cannot be withdrawn. After the announcement of this decision, DMarket fell into controversy. Many people even thought it was "theft", accusing it of violating the spirit of decentralization and hurting innocent users.
Exchanges such as Coinbase and Binance are relatively neutral. Binance said it has no plans to unilaterally ban Russian users, but will take necessary steps to take action against those sanctioned. Coinbase and Kraken exchanges have also expressed similar stances.
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NFT platform DMarket freezes Russian user accounts, causing controversy
As an emerging asset of globalization, encrypted assets are being involved in the vortex of the Russia-Ukraine conflict. With the United States, France and other countries announcing sanctions against Russia, encryption companies that have always advocated decentralization are also facing the difficulty of choosing a position.
On February 27, Ukrainian Deputy Prime Minister and Minister of Digital Transformation Mikhailo Fedorov (Mykhailo Fedorov) launched an appeal on social media, hoping that crypto asset exchanges will freeze the accounts of all Russian users to help Ukraine protect itself from Invaded. He emphasized that not only addresses related to Russian and Belarusian politicians should be frozen, but also those of ordinary users.
A few days ago, Fedorov just announced that Ukraine accepts encrypted asset donations, and announced the USDT donation addresses in BTC, ETH and TRC20 formats. The Ukrainian government official believes that crypto assets play an important role in this war.
After Fedorov's voice came out, the first response was a game NFT trading market called DMarket. The platform announced that, as a startup born in Ukraine, it has decided to sever all ties with Russia and Belarus. With immediate effect, Russian and Belarusian users are prohibited from registering on the platform; previously registered user accounts in these regions are frozen; all assets and skins remain in user accounts, but access to their use is currently restricted; the platform no longer supports Russia ruble.
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DMarket supports Ukraine on its official website
DMarket's move was quickly noticed by Fedorov. He praised DMarket's approach on Twitter, and also said that the funds from the frozen accounts can be donated to the war, "great."
DMarket's decision and Fedorov's remarks sparked huge controversy. In the Twitter comment area, some netizens rebuked Fedorov, saying, "This is disgusting. This is money stolen from innocent users. It has nothing to do with war and runs counter to the overall philosophy of encryption and Web3." Another A netizen accused DMarket, saying, "I don't think you understand encrypted assets. Are you proud of centralization? Stealing money from innocent people is not good at all."
DMarket’s unilateral freezing of user assets in Russia and Belarus also made many onlookers question the decentralized nature of the encryption field. Some people said that “the slogan of decentralization becomes ridiculous in the face of war.” In fact, DMarket is used as a game item transaction Although the platform has always claimed to use blockchain technology, not all NFTs are kept by users like OpenSea. DMarket has set up a centralized identity authentication system. To drop items and NFT, account registration and login are required first, and the items are stored in the user's account.
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Exchanges such as Binance refuse to freeze ordinary user accounts
Under the conflict between Russia and Ukraine, countries around the world have different positions, which also affect the decision-making of encryption companies.
On February 24, U.S. President Joe Biden announced that the U.S. and its allies would impose sanctions on five major Russian banks, as well as several elite Russian nationals, who are looking for ways to deter the Russian government financially. Subsequently, the European Commission said it planned to remove the country's sanctioned banks from the SWIFT cross-border payment network.
As crypto assets begin to play a role in the Russia-Ukraine conflict, the party that initiated the sanctions has also begun to increase its weight.
On March 1, the official website of the U.S. Department of the Treasury issued new regulations prohibiting Americans from providing any support to Russian oligarchs and entities, including the use of digital currencies or assets for transactions. In addition, the U.S. Department of the Treasury also required the three major crypto asset exchanges Binance, FTX and Coinbase to block sanctioned persons and addresses.
After Fedorov called on crypto asset exchanges to freeze Russian users, the Ministry of Digital Transformation of Ukraine also sent an official letter to eight trading platforms including Coinbase, Binance, Huobi, KuCoin, Bybit, Gate.io and Whitebit, as well as the Ukrainian exchange Kuna, Citing "fears that encrypted assets will be used to evade sanctions" as an excuse, they are required to stop providing services to Russian users.
A representative of Ukraine’s Ministry of Digital Transformation told the outlet that the letters asked exchanges to stop supporting the Russian ruble, ruble spot trading pairs and fiat gateways, including Russian payment systems. The ministry also asked exchanges to ban all Russian clients.
The above-mentioned encrypted asset exchanges are not decentralized applications built on the blockchain. As centralized entities, they can indeed freeze accounts without the permission of users. Therefore, the decisions of these trading platforms have attracted much attention .
Subsequently, crypto asset exchange Binance issued a statement claiming that it has no unilateral plans to ban Russian users from the platform. "However, we are taking the necessary steps to ensure that we take action against those sanctioned while minimizing the impact on innocent users. Should the international community expand these sanctions further, we will also aggressively enforce them."
Jesse Powell, the CEO of the Kraken exchange, also publicly stated that the exchange cannot freeze the accounts of Russian customers without legal requirements.
Coinbase said in a statement that it would not impose any blanket ban on transactions involving Russian addresses, but would restrict accounts that may involve sanctioned individuals or entities. Coinbase says its mission is to increase economic freedom, and a unilateral blanket ban would harm ordinary Russian citizens.
The statements of the above-mentioned exchanges are basically similar, that is, they will take action against specific sanctioned users, but will not ban ordinary Russian users, so as not to implicate innocent people. It is worth noting that Binance stated that it is making donations through its internal charity system to help the humanitarian crisis in Ukraine.
Compared with DMarket’s comprehensive ban on Russian and Belarusian users, the current decisions of exchanges such as Binance and Coinbase are more accepted by the outside world. Some people in the encryption field believe that the purpose of the encryption economy is decentralization and openness, not privilege and arbitrariness. Even under the current special situation, encryption entities should follow this principle as much as possible. "All encryption companies have a responsibility to Defend people's economic freedom, not be a weapon of pressure on innocent people."
