CommEX, a prominent crypto exchange that had taken over Binance’s operations in Russia, shocked the industry when it announced its decision to wind down operations in the country. This move comes on the heels of Binance’s own exit from Russia in September 2023, citing a one-year timeline for the process to be completed.
In a recent post on X, CommEX Russia revealed that it would begin the gradual process of winding down operations starting March 25. The exchange outlined a series of steps, including stopping new user registrations, halting asset transfers from Binance, and ceasing deposits in both fiat and cryptocurrencies. By March 28, opening positions for simple futures and futures trading will be winding down, followed by the end of new advertisements on the P2P marketplace by April 5.
After taking over Binance’s Russian business, CommEX faced an uphill battle as local clients swiftly migrated to other platforms. The exchange witnessed a substantial drop in its peer-to-peer (P2P) trading activity, plummeting by 10% to 30% within just a month of the transition. Binance’s daily ruble P2P transactions saw a significant decline from 7,700 at the beginning of 2023 to a mere 3,400 by September of the same year.
Binance further exacerbated matters by discontinuing all Russian ruble (RUB) services on January 30, 2024, as part of its strategic withdrawal from the country. The closure of open spot orders associated with RUB, along with the removal of RUB trading pairs from Binance Convert and Binance Pay, dealt a severe blow to Russian users who had come to rely on the platform.
According to Roman Nekrasov, co-founder of the ENCRY Foundation, Binance’s departure from Russia was primarily driven by pressure from U.S. regulators who accused the exchange of money laundering and sanctions evasion. The imposition of restrictions on Russian users, such as capping holdings at $10,000 and limiting transactions to ruble, further alienated the customer base.
Despite the challenges, Binance reportedly raked in annual revenues of $2 to $4 billion from its Russian users, underscoring the lucrative nature of the market. However, the fallout from regulatory scrutiny and user dissatisfaction ultimately spelled doom for both Binance and its successor, CommEX, in the Russian crypto landscape.
The saga of CommEX’s rise and fall in Russia serves as a cautionary tale for crypto exchanges operating in jurisdictions fraught with regulatory uncertainties and geopolitical tensions. The rapid unraveling of a once-thriving business underscores the need for meticulous risk assessment and proactive compliance measures to navigate turbulent waters in the crypto industry.