Coinbase Says Pushing Crypto Offshore May Increase Amount of Illicit Activity

The largest US-based crypto exchange wants to prevent crypto from thriving in offshore jurisdictions.

In a new blog post, Coinbase says leaving crypto to flourish abroad where entities are not subject to US laws will only enable bad actors to easily use digital assets for illicit purposes.

“We maintain a robust compliance program, which includes KYC (know your customer) checks, sanctions screening, suspicious activity reporting, and strong law enforcement partnerships, to prevent and detect illicit activity on our platform. Further, blockchain analytics technology allows us to trace, report, and even prevent terrorist financing. This is why it’s critical to prevent crypto from thriving offshore.”

The statement comes amid reports that the Palestinian militant group Hamas, which launched devastating attacks on Israel on October 7th, initiated a fundraising campaign on social networks asking the public to deposit cryptocurrencies into its accounts.

“The reports of Hamas funding linked to digital assets are connected to offshore entities not subject to US laws, including anti-money laundering and sanctions regulations, making it easier for them to engage in such conduct.”

Coinbase says the US needs to retain its position as the world leader in the fight against financial crime and terrorism.

“By creating clear rules of the road, we keep crypto in the United States and other regulated jurisdictions, ensuring compliance with sanctions and anti-money laundering rules.”

According to the Financial Times, more than 100 Hamas-linked accounts have been closed on Binance since the conflict started. Israeli authorities are also looking into 200 other crypto accounts, most of which are held on the leading crypto exchange.

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