Like many others, I watched the excellent documentary about Michael Jordan, The Last Dance, during one of the many lockdowns in my native Ireland in 2020. One episode in particular came back to mind this week in light of the developments in Russia and their implications for the cryptocurrency market. Episode six, which considers Jordan’s status as a role model, felt especially relevant.
“If I had the chance to do it all over again, I would never want to be considered a role model. It’s like a game against me. I can’t win,” Jordan complained.
Jordan, of course, was a global superstar in the 1990s. Kids queued around the block for the latest pair of sneakers. His posters decorated teenagers’ bedrooms around the world. Millions of young people wore jerseys with the number 23 on the back.
Yet Jordan was criticized for not using his fame more, for not accepting responsibility as a role model. Not because he was a bad example — far from it — but because he refused to disown the “I’m just an athlete, I just throw the ball” attitude. His lack of activism contrasted with many modern sports stars, from his basketball successor LeBron James to Formula 1 driver Lewis Hamilton.
In many ways I felt sorry for MJ. But that was the job he chose — whether we like it or not, every role has parts people don’t like.
Changpeng Zhao
What made me think about Jordan’s gravity-defying skills was the issue of economic sanctions on Russia and how the cryptocurrency industry connects to those sanctions. Binance CEO Changpeng Zhao gave an interview on Bloomberg TV that struck me as similar to Jordan’s stance.
“It’s not our decision to freeze user accounts… I think we should separate politicians from ordinary people,” he said. “We follow the position taken by governments around the world. Again, we don’t make the rules regarding sanctions; there are organizations that make those rules — we comply with them.”
But don’t CZ, Binance, and the crypto industry at large bear some responsibility to take a stance and join the international effort to enforce sanctions? Do cryptocurrencies provide Russia with a means to evade financial sanctions? If Binance allows such evasion, does it indirectly undermine measures intended to prevent war and save countless innocent lives?
Or is Binance simply an exchange? Is CZ merely the CEO of a financial company? Is Michael Jordan simply a basketball player?
Moral dilemma
I’m not entirely sure how I feel about it. To be clear, I love crypto. I believe it can change the world for the better. It can disrupt what I see as an archaic, inefficient, and unequal financial system, helping to build a more democratic society with a monetary framework that is more transparent, trustworthy, and efficient.
Many of these benefits come from decentralization: removing intermediaries and shifting trust away from institutions — which can be corrupt, set rules in favor of elites, and increase inefficiency and fees — and toward mathematics in the form of a transparent, verifiable ledger known as the blockchain.
But what if that decentralization helps malicious actors, such as Russia, evade sanctions and sustain a war against an innocent country?
I have to laugh at myself a little here.
The Russia issue gave me pause. I’ve previously mocked what I consider foolish arguments against cryptocurrency — claims like “it’s only for criminals” or “it helps drug traffickers.” Sure, those uses exist, but they are a drop in the ocean. Do people think the US dollar isn’t used in crime? A 2009 study found that 90% of US dollars contained traces of cocaine.
But Russia made me think. Centralized exchanges such as Binance have the technical ability to freeze accounts. A KYC-compliant exchange could, for example, freeze the account of a Russian oligarch converting millions into crypto. That freezing capability — a byproduct of centralization — is what crypto purists mock when they criticize Binance for not fully aligning with cryptocurrency’s philosophical roots.
Kraken
While Binance’s CEO echoed Jordan’s line of reasoning, Kraken CEO Jesse Powell went further when he rejected Ukrainian Vice President Mykhailo Fedorov’s request to freeze all Russian accounts.
“Bitcoin is the embodiment of libertarian values, which strongly favor individualism and human rights,” Powell argued.
But what if those individuals are Russian billionaires colluding with Putin and financing a devastating war?
Appeal from Ukrainian Vice President Mykhailo Fedorov to crypto exchanges
So what’s the solution?
There’s no easy answer. We see similar dilemmas in Big Tech. Twitter’s suspension of Trump was arguably the most prominent example — to paraphrase Powell, isn’t that individual exercising his personal freedom? The dispute between Spotify and Joe Rogan is another moral grey area, as are Facebook’s hesitant efforts to combat misinformation. The stakes are higher with the war in Ukraine, but the themes of freedom, censorship, and restriction are comparable.
As I said, I love crypto and truly believe it can do enormous good for our world. But should we champion a completely decentralized future when such decentralization could be exploited by actors committing large-scale harm?
Ultimately, I still believe the benefits outweigh the downsides. Some of the current rhetoric about Russia’s ability to use crypto is exaggerated: at a sovereign scale, it is simply impractical to rely meaningfully on crypto to replace the assets that have been frozen. The roughly $630 billion in frozen external assets that could otherwise help Putin resist sanctions and support the ruble would dwarf more than three-quarters of Bitcoin’s market capitalization. Moreover, blockchain transparency allows transactions to be tracked. The global advantages crypto can offer remain too significant to ignore.
Regarding Binance and Kraken specifically, I side with both Zhao and Powell in principle. Like Michael Jordan, who was primarily a basketball player, they run fintech companies. Why should they be expected to make sweeping geopolitical decisions? That responsibility lies with governments, and both exchanges have indicated they will comply with the law if politicians decide to act — as happened recently when assets connected to protesters were frozen in Canada.
Everything has pros and cons, especially at the scale of what crypto attempts to do: disrupt the entire financial sector. The current financial system is far from perfect — that should not be forgotten. I’m not arguing crypto is flawless, but it’s still in its infancy and not going away anytime soon. Look how far it has come in a decade.
So no sneering: crypto remains the protagonist in my view.