The Inca Digital Report: Cryptocurrency Exchanges Facilitate Sanction Evasion

  • Major crypto exchanges fail to prevent sanctioned Russian banks from transacting, allowing them to bypass restrictions.
  • Russian traders still using leading cryptocurrency exchanges to circumvent Western sanctions, according to a blockchain forensics report.

Cryptocurrency exchanges, including some of the world’s largest, has failed to implement measures to prevent Russian banks and traders under sanctions from transacting, according to a recent report by blockchain analytics firm Inca Digital. The findings have raised concerns about the effectiveness of sanctions against Russia and the role that crypto exchanges may play in circumventing them.

Russian Traders Using Cryptocurrency Exchanges to Bypass Restrictions

Despite being under sanctions by the U.S., Canada, the U.K., and the European Union, among others, at least two established coin trading platforms, Huobi and Kucoin, continuously allow its Russians to use their bank cards for peer-to-peer deals. 

The report also identified nearly half of the 163 crypto trading platforms, centralized and decentralized exchanges, as well as P2P and OTC service providers examined, allowing Russian nationals to buy digital currencies, applying different KYC requirements, trading limits, and geolocation tools.

Tether and Crypto: An Easy Way for Russians to Circumvent Sanctions

The report also highlighted the use of Tether to circumvent Western sanctions on Russia, with a spike in discussions on Russian social media about employing the stablecoin for remittances.”Tether is frequently used by Russians to move money out of the country,” said the CEO of Inca Digital.

According to the study, the industry leader in terms of daily trading volume, “offers several avenues for Russians to convert local currency into crypto,” including through its OTC and P2P marketplaces, which are available to them without KYC checks for up to $10,000.

The Potential Impact on Sanctions and Cryptocurrency Regulations

The findings of the Inca Digital report raise concerns about the effectiveness of sanctions against Russia, as well as the potential impact on cryptocurrency regulations. The report’s authors noted that allowing crypto buyers to trade with each other user accounts with sanctioned institutions represents a “direct violation of U.S. and European sanctions with a little bit of a loophole.” It remains to be seen how regulators will respond to these alleged violations and what steps will be taken to prevent similar activities in the future.

The Importance of KYC and Geolocation Tools in Preventing Sanction Evasion

The report highlights the importance of implementing KYC and geolocation tools in preventing sanction evasion by crypto traders. The use of KYC requirements, trading limits, and geolocation tools can help exchanges identify and prevent transactions involving sanctioned individuals or institutions. However, as the report shows, some exchanges may still allow sanctioned individuals and institutions to transact through peer-to-peer deals, highlighting the need for greater regulatory oversight.


The findings of the Inca Digital report demonstrate the challenges faced by regulators in preventing crypto exchanges from facilitating the evasion of sanctions. While some exchanges may have implemented measures to prevent sanction evasion, others appear to have failed in their efforts. The report highlights the need for greater regulatory oversight and the importance of implementing effective KYC and geolocation tools to prevent sanction evasion by crypto traders. As the use of cryptocurrencies continues to grow, regulators must take the necessary steps to prevent the exploitation of crypto exchanges by sanctioned individuals and institutions.