Fintech

Punish Russia by blocking its crypto wallets? It's complicated.

A Ukrainian official’s request for exchanges to block Russian crypto wallets is doable but hard to pull off, experts say.

The Russian flag on a coin chained up.

Two major exchanges say a blanket ban on crypto transactions is out of the question.

Illustration: Christopher T. Fong/Protocol

A top Ukrainian official’s call for crypto exchanges to block all wallets in Russia and Belarus has been rejected by two major exchanges. And although it can be done, pulling off such a move would be really hard, experts say.

Ukraine’s vice prime minister, Mykhailo Fedorov, on Sunday urged crypto exchanges “to block addresses of Russian users.” The move would be in addition to financial sanctions already in place mainly against top officials and billionaires identified as close allies of Russian President Vladimir Putin.

“It's crucial to freeze not only the addresses linked to Russian and Belarusian politicians, but also to sabotage ordinary users,” Fedorov said.

The Biden administration, which has joined allies in imposing sanctions against Russia, reportedly is asking crypto exchanges to make sure Russian individuals and organizations aren’t using virtual currencies to avoid sanctions, according to Bloomberg.

But two major exchanges say a blanket ban on crypto transactions is out of the question.

Coinbase will block accounts and transactions involving individuals or entities mentioned in the sanctions that are already in place. But “a unilateral and total ban would punish ordinary Russian citizens who are enduring historic currency destabilization as a result of their government’s aggression against a democratic neighbor,” the spokesperson said.

Binance also said it will block the accounts of Russian individuals targeted by the sanctions, but will not freeze the accounts of other users from Russia, according to a report.

Rob Siegel, a management lecturer at the Stanford Graduate School of Business, called Fedorov’s move a “clever play.” “He's trying to get more companies to line up against Russia — and this is but another way to cut them off financially,” he told Protocol.

And it’s certainly doable, said Mike Fasanello, director of Training and Regulatory Affairs at Blockchain Intelligence Group. “It absolutely is possible to freeze all accounts from certain geographic locations,” he told Protocol. “Mapping geolocational data on crypto wallets is tedious, but can be done.”

Chris Kline, chief operating officer and co-founder of Bitcoin IRA, agreed, saying there are “IP identification methods that could possibly be used to stop transactions.” But there are also “plenty of workarounds” for users “like IP masking, ghosting and imitation,” he told Protocol. “It would take a concentrated effort by several different entities both in the crypto and traditional finance sectors to coordinate something along what the vice prime minister of Ukraine is asking.”

Marco Bellin, CEO and founder of Datacappy, said crypto wallets are generally traceable, but there are ways to obfuscate transactions. “You can spoof your geolocation. So you can be in Russia, Belarus and pretend you're in New York,” he told Protocol. “If I'm in Russia, and I want to transact with somebody in North Korea or Iran, somewhere that isn't trying to deny you services, it's nearly impossible to stop.”

But he said the Russian officials and oligarchs who have stored big chunks of their wealth in crypto wallets do have a lot to worry about, especially with international hacking groups moving aggressively against them.

“If you can identify the wallet, there are sophisticated tools by which you can empty some of these wallets,” he said. He thinks Fedorov’s “call to action” was “more of a subtle call to action to hacking groups to try and identify the wallets and drain those accounts.”

“I assume any crypto accounts that have hundreds of millions of dollars are accounts that people are aware of,” he said. “Hackers, Anonymous, those guys have really sophisticated tools. The world hacking group is now actively cyber-attacking Russia … If I were one of the oligarchs, quite honestly, I would have one of my tech guys trying to figure out how to get the money out.”

Policy

Musk’s texts reveal what tech’s most powerful people really want

From Jack Dorsey to Joe Rogan, Musk’s texts are chock-full of überpowerful people, bending a knee to Twitter’s once and (still maybe?) future king.

“Maybe Oprah would be interested in joining the Twitter board if my bid succeeds,” one text reads.

Photo illustration: Patrick Pleul/picture alliance via Getty Images; Protocol

Elon Musk’s text inbox is a rarefied space. It’s a place where tech’s wealthiest casually commit to spending billions of dollars with little more than a thumbs-up emoji and trade tips on how to rewrite the rules for how hundreds of millions of people around the world communicate.

Now, Musk’s ongoing legal battle with Twitter is giving the rest of us a fleeting glimpse into that world. The collection of Musk’s private texts that was made public this week is chock-full of tech power brokers. While the messages are meant to reveal something about Musk’s motivations — and they do — they also say a lot about how things get done and deals get made among some of the most powerful people in the world.

Keep Reading Show less
Issie Lapowsky

Issie Lapowsky ( @issielapowsky) is Protocol's chief correspondent, covering the intersection of technology, politics, and national affairs. She also oversees Protocol's fellowship program. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University's Center for Publishing on how tech giants have affected publishing.

Sponsored Content

Great products are built on strong patents

Experts say robust intellectual property protection is essential to ensure the long-term R&D required to innovate and maintain America's technology leadership.

Every great tech product that you rely on each day, from the smartphone in your pocket to your music streaming service and navigational system in the car, shares one important thing: part of its innovative design is protected by intellectual property (IP) laws.

From 5G to artificial intelligence, IP protection offers a powerful incentive for researchers to create ground-breaking products, and governmental leaders say its protection is an essential part of maintaining US technology leadership. To quote Secretary of Commerce Gina Raimondo: "intellectual property protection is vital for American innovation and entrepreneurship.”

Keep Reading Show less
James Daly
James Daly has a deep knowledge of creating brand voice identity, including understanding various audiences and targeting messaging accordingly. He enjoys commissioning, editing, writing, and business development, particularly in launching new ventures and building passionate audiences. Daly has led teams large and small to multiple awards and quantifiable success through a strategy built on teamwork, passion, fact-checking, intelligence, analytics, and audience growth while meeting budget goals and production deadlines in fast-paced environments. Daly is the Editorial Director of 2030 Media and a contributor at Wired.
Fintech

Circle’s CEO: This is not the time to ‘go crazy’

Jeremy Allaire is leading the stablecoin powerhouse in a time of heightened regulation.

“It’s a complex environment. So every CEO and every board has to be a little bit cautious, because there’s a lot of uncertainty,” Circle CEO Jeremy Allaire told Protocol at Converge22.

Photo: Circle

Sitting solo on a San Francisco stage, Circle CEO Jeremy Allaire asked tennis superstar Serena Williams what it’s like to face “unrelenting skepticism.”

“What do you do when someone says you can’t do this?” Allaire asked the athlete turned VC, who was beaming into Circle’s Converge22 convention by video.

Keep Reading Show less
Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Google Voice at (925) 307-9342.

Enterprise

Is Salesforce still a growth company? Investors are skeptical

Salesforce is betting that customer data platform Genie and new Slack features can push the company to $50 billion in revenue by 2026. But investors are skeptical about the company’s ability to deliver.

Photo: Marlena Sloss/Bloomberg via Getty Images

Salesforce has long been enterprise tech’s golden child. The company said everything customers wanted to hear and did everything investors wanted to see: It produced robust, consistent growth from groundbreaking products combined with an aggressive M&A strategy and a cherished culture, all operating under the helm of a bombastic, but respected, CEO and team of well-coiffed executives.

Dreamforce is the embodiment of that success. Every year, alongside frustrating San Francisco residents, the over-the-top celebration serves as a battle cry to the enterprise software industry, reminding everyone that Marc Benioff’s mighty fiefdom is poised to expand even deeper into your corporate IT stack.

Keep Reading Show less
Joe Williams

Joe Williams is a writer-at-large at Protocol. He previously covered enterprise software for Protocol, Bloomberg and Business Insider. Joe can be reached at JoeWilliams@Protocol.com. To share information confidentially, he can also be contacted on a non-work device via Signal (+1-309-265-6120) or JPW53189@protonmail.com.

Policy

The US and EU are splitting on tech policy. That’s putting the web at risk.

A conversation with Cédric O, the former French minister of state for digital.

“With the difficulty of the U.S. in finding political agreement or political basis to legislate more, we are facing a risk of decoupling in the long term between the EU and the U.S.”

Photo: David Paul Morris/Bloomberg via Getty Images

Cédric O, France’s former minister of state for digital, has been an advocate of Europe’s approach to tech and at the forefront of the continent’s relations with U.S. giants. Protocol caught up with O last week at a conference in New York focusing on social media’s negative effects on society and the possibilities of blockchain-based protocols for alternative networks.

O said watching the U.S. lag in tech policy — even as some states pass their own measures and federal bills gain momentum — has made him worry about the EU and U.S. decoupling. While not as drastic as a disentangling of economic fortunes between the West and China, such a divergence, as O describes it, could still make it functionally impossible for companies to serve users on both sides of the Atlantic with the same product.

Keep Reading Show less
Ben Brody

Ben Brody (@ BenBrodyDC) is a senior reporter at Protocol focusing on how Congress, courts and agencies affect the online world we live in. He formerly covered tech policy and lobbying (including antitrust, Section 230 and privacy) at Bloomberg News, where he previously reported on the influence industry, government ethics and the 2016 presidential election. Before that, Ben covered business news at CNNMoney and AdAge, and all manner of stories in and around New York. He still loves appearing on the New York news radio he grew up with.

Latest Stories
Bulletins