Since the announcement of sanctions against Russia, which aim to isolate the country from the international financial system, governments have wondered if Moscow could use cryptocurrencies to circumvent these sanctions. In Europe, we are even working today on legislation against the “anonymity” of digital assets.
But for Changpeng Zhao, the boss of the Binance exchange, anonymity in cryptos is a myth. Zhao brought up this topic during an interview with CNN.
In this interview, he explains that people focus too much on cryptocurrencies, when these are “actually not good for avoiding sanctions.” » He cites as an example the cryptocurrencies stolen from Bitfinex in 2016 (billions of dollars). As long as these cryptos were not used, the authors of this hack were able to hide. But as soon as the digital assets were used, they got caught.
“The data shows that cryptos are much safer, but everyone is focused on crypto penalties. Nobody talks about banks, cash, oil, etc.”regrets the boss of Binance.
Changpeng Zhao: No smart person circumvents sanctions with crypto
He also explains that for large transactions in Bitcoin, you have to go through a centralized exchange, because decentralized exchanges do not have enough liquidity. However, when a person goes to use these centralized exchanges, like Binance, this one goes through an identification.
” […] and once you know a transaction is associated with someone on the blockchain, it’s very easy to track that afterwards. It is therefore a misconception that Bitcoin is anonymous. Bitcoin’s anonymous functionality is very, very weak”Zhao said.
For him, no smart person would use cryptos to circumvent these sanctions, since these digital assets are too easy to trace. In addition, governments around the world are increasingly good at doing this tracing.
Regarding the international sanctions against Russia, Binance explains that his company strictly follows the rules and blocks all people on the lists of these sanctions (and people who could be linked to these people). Nevertheless, Zhao believes that it is not for Binance to freeze the assets of ordinary Russian citizens and that this is a decision for governments.
Binance also reaffirms that it opposes war. And the crypto exchange says it has already pledged a $10 million donation to help Ukrainian refugees.
Other industry players have already made similar statements regarding crypto anonymity.
“Unlike cash, law enforcement can track and trace digital asset transfers with advanced analytics tools. None of this requires upsetting established expectations of wallet-holder privacy, as the open architecture underlying digital assets is public and provides unprecedented transparency into transaction details. The records are also permanent – no one (not crypto companies, not governments, not even bad actors) can destroy or alter the information”Coinbase recently explained in a blog post, to oppose proposed EU legislation.
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Binance CEO explains why crypto anonymity is a non-issue
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