Under a new set of terms of service set to launch in a few days, cryptocurrency owners from North Korea, Iran, Crimea, Syria, and Cuba will no longer be able to trade through Bittrex, currently one of the world’s leading cryptocurrency exchanges.
The Seattle-based company first announced its new terms of service in early February. Valid from March 9, 2018, they specify that one may not make use of Bittrex’s services “if you are located in, or a citizen or resident of any state, country, territory or other jurisdiction that is embargoed by the United States.”
Sanction Subversions
This new policy, it would seem, is in great part a reaction to the growing use of cryptocurrency as a means of bypassing international sanctions. As has been highlighted by many prominent individuals, including former presidential advisor Juan Zarate, such sanctions are frequently built upon the ongoing influence of the US dollar in the international market.
Being technically unrooted in any particular nation cryptocurrencies allow sanctioned countries to circumvent these restrictions and spend money across borders without hindrance.
Indeed, recent months have reflected a growing awareness of this loophole among nations affected by sanctions. North Korea, currently under several international financial restrictions in response to its nuclear weapons programme, has been linked to some cryptocurrency heists, mostly targeting South Korean exchanges, totaling billions of won’s worth of stolen digital currency.
In a recent interview with Vox, former US National Security Agency officer Priscilla Moriuchi estimated that North Korea might have earned as much as $200 million through the creation and selling of digital currencies.
Similarly, a recent Tweet from Iranian Minister of Information and Communications Technology Mohammad-Javad Azari Jahromi indicated that efforts were underway to implement a national digital in Iran. If this tweet is accurate, it is a far from an unprecedented move, as it would follow closely in the footsteps of Venezuela’s implementation of its own (oil-based) national cryptocurrency, the petro, with the Venezuelan government explicitly noting that it could prove instrumental in circumventing international financial blockades.
Rumors out of Moscow indicate that Russia is another nation entertaining the notion of a national cryptocurrency, the “Crypto-ruble,” as a means of bypassing the sanctions that the country has been under since 2014. However, despite earlier concerns among Russian crypto-investors, Bittrex has confirmed that Russia will not be among the countries cut off from its services by the new terms.
Closing Accounts
Bittrex’s new restrictions are themselves, not without precedent. Former Bittrex users in Iran have complained that, since mid-October of last year, the service has begun freezing Iranian accounts and stopped responding to attempts at communication, leaving users with no means of recovering funds held on the service.
“We’re having difficulties for a long time now, it started around two years ago,” said Yasser Ahmadi of Lioncomputer.
“Poloniex and Bitfinex announced that Iranian users should withdraw their funds and leave the exchange and now we’re having trouble with Bittrex. Bittrex started closing Iranian accounts without any heads up or announcements…and haven’t responded to our support tickets and emails since.”
Fears that digital currencies could be used as a means of subverting international sanctions have for a long time, been a defining element of anti-cryptocurrency sentiment. Bittrex’s new terms of service seem likely to be a response to this critique, though precisely what sort of impact they will have upon the international crypto-trade remains to be seen.
