Is Crypto a Tool for Sanction Evasion? What is the Truth?

Two questions that are top of mind today:

Is crypto a tool for sanctions evasion? Crypto isn’t seriously being used by nation state actors to avoid sanctions right now, yet politicians are talking about crypto as if it is. What’s the truth? 


Are we headed toward recession? Commodity prices are increasing, which materially impacts just about everything. Meanwhile, Putin shows no sign of backing down, and Ukraine shows no sign of giving up. High commodity prices are akin to the Fed raising interest rates; doing stuff costs more. Economic activity has more friction. Can the current state of the economy absorb these new costs?

Let’s discuss!

Let’s start with crypto as a tool for sanctions evasion.

Right now, the idea that “crypto is helping people evade sanctions” is at the top of the global conversation.

READ: Crypto’s Role in Conflict; An Aid or Hindrance?

The coordinated sanctions on Russia have been effective at delivering economic pain for the Russian state, citizens, oligarchs, and Putin alike. In western media, crypto is being painted as a tool that ‘Putin and his cronies’ are using to evade the effect of the sanctions.

As seen from a tweet from Elizabeth Warren:

The sentiment from the west is fear that crypto is a threat to US security because it undermines the ability for the US to impose sanctions on Russia. However, there is no clear evidence that crypto has made an impact on the sanctions imposed on Russia.

While it’s been made clear that there is no evidence that ‘Putin and his cronies’ are actually using crypto, the point is that they might be able to. At the same time, western politicians are fearful that Putin might use crypto to evade sanctions, but in reality both Ukrainian and Russian citizens are using crypto to protect the value of their savings. We know this from the spike in BTC-Ruble volume, the premium for BTC on Russian exchanges, and on-the-ground reports of people fleeing with crypto. 

The truth is the western economic sanctions are hurting everyone in Russia and are working but it is the Russian citizens that suffer, not the regime – and these citizens can use crypto as an escape hatch, while the Russian oligarchs’ super-yachts can’t fit on the blockchain. What does that mean for the Russian oligarchs?

The large wealthy elite gets hit; the citizens escape through crypto.

This is exactly what one would predict would happen, looking at the first-principle fundamentals of how crypto works. Private keys empower individuals the most. The innovations that crypto brings raise the tide for everyone, but it raises it more for people than it does institutions.

When the USA put sanctions on the Russian central bank, it froze $640 billion in assets spread out across the world. That’s roughly 1/3 of the crypto market cap.

The innovations and power that crypto brings to the table wouldn’t have protected this scale of wealth from western sanctions. Crypto’s not big enough.

As tweeted by Hannah Lang:

You cannot move $640 billion in wealth without people noticing, no matter how awesome your zero-knowledge of privacy cryptography is. Again, crypto is transparent even though it can be private.

Remember the 2016 DAO hacker?  Caught via on-chain tracemarks.

And the 2016 Bitfinex hacker? Caught via on-chain footprints.

As soon as the level of wealth is significant, and as the powers of the world care, crypto stops being useful as a tool to obfuscate your activity. Because it is an open ledger, trying to sneak lots of money through crypto would be more traceable than using U.S. dollars cash, art, gold, or other assets.

After all, it’s a public ledger. Every transaction that happens on the blockchain is traceable.

For this reason, crypto disproportionately empowers individuals, not oligarchs.

So onto the second concern: Are we headed toward recession?

Follow for the next article answering these concerns.

Are We Recession Bound?

At the time of this article the writers were actively using Coinbase, FTX, Metamask, Trust Wallet,, Binance, Robinhood, Webull, KuCoin, Voyager and Hotbit. They also own currencies: BTC, ETH, USDC, SOL, AVAX, ALGO, MATIC, CRO, ENS, DOT, XLM, MANA, RARI, ENJ, XRP, FIL, SAND, HNT.

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Manal Iskander

Manal is a cryptocurrency investor with numerous crypto and blockchain courses under her belt - including courses from MIT. A researcher with a wealth of knowledge about the economic impacts of crypto both locally and globally.

Davontay Martin

For the people. Cryptocurrency is empowering us with censorship resistance, freedom of speech, supply scalability and most importantly decentralization. With numerous exposure and interactions in crypto, my passion has led me to lead others. My passion lies in educating those who have never had the opportunity to succeed or transact in crypto.

Michael Diaz

Michael joined the crypto community back when Coinbase had bitcoin as its one and only coin. Stayed to see the development and evolution of altcoins, memecoins, DAOs, NFTs, and the never-ending rabbit hole of blockchain technology.

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