Binance has restricted trading for Russians. When the exchange will leave Russia

Recent events

In March, Binance stopped working with the cards of Russian banks, which were under sanctions. Moreover, the cards of the sanctioned banks were also excluded from the P2P platform of the crypto exchange. As the head of Binance Changpeng Zhao noted, in the current situation, the exchange will continue to implement the sanctions in accordance with the policy of the European Union.

On April 21, Binance announced that it was suspending the service of accounts of Russian residents who keep more than €10 000 worth of assets in their accounts. Only withdrawal of funds from the exchange will be available to such accounts. The rules apply to spot, futures, and depository wallets, as well as other Binance products, in particular Staking and Earn. Russian users who keep more than €10 000 on Binance will have 90 days to close all positions, starting from April 21, 2022.

The restrictions do not apply to accounts of Russians living outside of Russia, as well as those accounts where the amount does not exceed the specified limit. At the same time, accounts on the exchange site must be verified.

Russian traders responded to the introduction of restrictions and created a petition. As of April 27, 2022, 489 people have already signed it. After reaching 500 signatures the petition will be able to enter the top-recommended ones.

Precedents exist

Over the past two months, some crypto exchanges have already stopped serving Russian users. Such platforms as BTC-Alpha, CEX.io, Kuna, and WhiteBIT completely blocked Russian residents. In April, the European authorities imposed the fifth round of sanctions against Russia, which includes restrictions on cryptocurrency transactions. At the moment, Binance is the only cryptocurrency company that has begun to comply with the new restrictions, according to the head of the exchange.

Can Binance completely withdraw from Russia?

Sanctions against Russians, including those related to cryptocurrencies and digital assets, are being introduced gradually, Yuri Brisov, founder of the law firm LFCS Legal Support, said in an interview for Forbes Russia. According to him, the restrictions on cryptocurrency exchanges are not yet total for Russian residents, but eventually, the accounts of Russian users may be completely blocked without access to the funds in their accounts. Therefore, storing cryptocurrencies on centralized cryptocurrency exchanges ceases to be attractive, the lawyer added.

According to Brisov, in the case of a complete blocking of accounts and freezing of funds, even an appeal to the court will not help the holder to resolve the situation. The Russian court will probably decide positively. However, given the sanctions and the situation on the world stage, foreign organizations may ignore the court ruling at the plaintiff's location.

In addition, all crypto exchanges are located in the foreign legal field, which means that in the court where the defendant is located, a Russian citizen may suffer another setback. Thus, it is unlikely to defend their rights in court when blocking the account and its funds, the expert said.

Dmitry Noskov, an expert of StormGain cryptocurrency exchange, also admitted the probability of complete blocking of Russian users on Binance in a conversation with the representative of GetBlock Magazine. In his opinion, this is to be expected if the USA continues to tighten its sanctions policy against Russia.

Noskov notes that everything will depend on the decision of cryptocurrency exchange management. It is also possible that funds will remain frozen in accounts, and it will not be possible to withdraw them, the expert noted. Such a freeze could last for several years. However, it is possible that the exchange will give users the opportunity to withdraw funds before blocking, Noskov added.

“Now Russian users should withdraw their funds from centralized crypto-exchanges as quickly as possible, in order not to lose their money later,” the expert urged.

How to secure your funds

If it is impossible to count on a legal settlement in case an account on Binance is blocked, the best way to keep your funds safe, according to Brisov, is to withdraw them to a cold wallet.

Andrei Zavertiaev, a lawyer at the Association of Digital Economy and Blockchain Technologies, gave similar advice on protecting funds from being blocked.

“Cryptoassets in cold wallets are not affected by third parties, so this method is considered the most secure way to store cryptocurrency,” Noskov notes.

Earlier, the Association of Banks of Russia (ABR) proposed to introduce criminal liability for storing cryptocurrencies outside of exchanges. According to Anatoly Kozlachkov, vice president of ABR, the concept was developed with the advice of the Ministry of Internal Affairs. The association believes that the criminal law approach will equalize all participants of the crypto market as individuals obliged to pay taxes. It will also help the Bank of Russia and the Ministry of Finance to resolve contradictions in the regulation of cryptocurrencies, the ABR noted.