Binance stops Ukraine withdrawals

Cryptocurrency exchange Binance has stopped clients in Ukraine from using its services, preventing Ukrainians with cryptocurrency holdings from withdrawing their funds into local currency.

In a 2 March statement on Binance’s official Telegram channel, the exchange said it was temporarily halting transactions in Ukrainian hryvnia, as well as card transactions from Ukrainian citizens.

Mikhail Chobanyan, CEO of Kuna, a Ukrainian cryptocurrency exchange, confirmed that the ban on movements between local currency and cryptocurrency had affected all exchanges in the country.

According to Binance, Ukrainian citizens will still be able to use its peer-to-peer transfer platform to exchange cryptocurrency and fiat currency.

According to Mikhail Kukhar, a Ukrainian economist, the ban on cryptocurrency exchanges was introduced at the request of Ukraine’s central bank, the National Bank of Ukraine.

The decision to halt services for Ukrainian clients marks an about-turn for Binance, which in April last year said it was launching a ‘refugee crypto card’ for Ukrainians forced to leave their country because of the war.

At the time, Binance said it would give verified refugees 75 BUSD (Binance’s dollar stablecoin) per month for three months. In November, Binance said the refugee card had helped 15,000 Ukrainian refugees and internally displaced people.

Last month Paxos, which administers BUSD, said it was stopping further issuance of the tokens. Press reports in January had suggested that Binance had in the past failed to ensure that BUSD was fully backed by dollars held in segregated accounts.

Binance’s move to cut off Ukrainian nationals follows an earlier ban on citizens of Russia using the exchange.

In April last year, Binance said that following the introduction of sanctions it was limiting services for Russian nationals, individuals residing in Russia or legal entities established in Russia with crypto assets exceeding the value of 10,000 EUR.

It’s unclear whether the new restrictions on cryptocurrency use in Ukraine reflect growing international pressure to crack down on exchanges, which play a key role in facilitating money movements.

On March 1 three US senators wrote an open letter to Binance’s CEO, Changpeng Zhao, accusing the exchange of having “acted against its own compliance department’s assessment by continuing to recruit customers in seven countries, including Russia and Ukraine”.

These countries were judged to be of ‘extreme’ money laundering risk”, the senators wrote.

Since 2018, the exchange has been the target of ongoing investigations from the Department of Justice for money laundering conspiracy and criminal sanctions violations, the letter noted.

The senators requested that Binance and its related entities submit relevant financial and internal documents and respond to questions by March 16, 2023.

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