Cryptocurrency exchange Binance has faced criticism for using coded terms to represent sanctioned Russian banks in its peer-to-peer (P2P) service's payment options. Binance's P2P trading platform functions as a message board where users can offer to buy or sell cryptocurrencies. Unlike its main exchange, the P2P service enables fiat currency transactions without involving Binance's servers.
The controversy began when The Wall Street Journal reported that Binance listed sanctioned Russian banks, like Tinkoff and Rosbank, as transfer methods on its platform. This raised concerns that acknowledging these banks as payment options might breach sanctions.
Reports emerged that Binance had removed the sanctioned banks from its list of payment methods. However, the banks resurfaced on the platform under code names "yellow" and "green," with "yellow" standing for sanctioned Tinkov Bank and "green" for sanctioned Ross Bank. The Wall Street Journal later confirmed that the sanctioned banks had been taken down from the list after the exchange found that some account holders were using the service to evade sanctions.
Binance's spokesperson stated that the exchange regularly updates its systems to ensure compliance with global and local regulations and addresses identified gaps swiftly. The removal of the "yellow" and "green" payment methods, though some users continued to advert is sales with "green banks" as a payment option. Despite the official removal, these users mentioned other payment methods in their listings while specifying in the terms that they only accept transfers through "Green Banks."
The controversy highlights the contentious nature of peer-to-peer cryptocurrency markets, with proponents arguing for privacy and opponents suggesting they are used for illicit activities. Binance's P2P service gained traction after popular marketplace LocalBitcoins shut down in 2023. However, some experts, like Paxful co-founder Ray Youssef, emphasizes that P2P platforms remain centralized and could be vulnerable to government crackdowns. Youssef is working on a new marketplace called "Civ Kit" to address these concerns.
