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In Ukraine: Crypto Isn't Saving Russia, Exxon Pulls Out and More

U.S. oil and gas supermajor, Exxon Mobil Corp. (NYSE: XOM), said in a statement on Tuesday that it “deplores” Russian invasion of Ukraine and “[i]n response to recent events, we are beginning the process to discontinue operations and developing steps to exit the Sakhalin-1 venture.”

Sakhalin Island is located in the Sea of Ohotsk off Russia’s east coast and only a few miles north of Japan’s Hokkaido Island. The project is owned by a consortium that includes the Russian government, the Sakhalin (oblast) government and a management and operations entity, Exxon Neftegas, led by Exxon. Drilling for oil and gas began in 2003. Exxon valued its stake in the project at $4 billion.

In its statement, the company also said, “Given the current situation, ExxonMobil will not invest in new developments in Russia.” As we noted in our overview of events related to the invasion, Russia has said it will not allow foreign companies to exit their investments in the country. That would indicate that the companies expect the Russian government to seize the assets and that they are willing to pay that price to disassociate themselves from Russia. It is also possible that no matter what the outcome of the invasion, none of these firms will be allowed to do business in Russia again.

Russia got more bad news on Tuesday when Apple Inc. (NASDAQ: AAPL) announced that it was stopping all product sales in Russia and has begun the process of booting state news apps RT and Sputnik News from the App Store. Alphabet Inc. (NASDAQ: GOOGL) has removed the apps from its Google Play Store in the European Union, the United Kingdom, Ukraine, Iceland, Liechtenstein, Norway and Switzerland. Twitter Inc. (NYSE: TWTR) has said it will comply with EU sanctions that the company expects to include a requirement “to withhold certain content in EU member states.” Meta Platforms Inc. (NASDAQ: FB) is blocking access to RT and Sputnik News in the EU and globally demoting posts from Russian state media. YouTube and TikTok are taking similar steps.

The recent runup in bitcoin from around $38,000 early Monday to more than $44,000 early Tuesday has led many people to conclude that Russian businesses and individuals (aka, oligarchs) are using cryptocurrencies to sidestep financial sanctions imposed since Russia invaded Ukraine last Thursday. That is probably not happening.

In a long Twitter thread posted Tuesday, Jake Chervinsky, executive vice president and head of policy for the Blockchain Association, explains why. The short version is that it is illegal and that transacting business with any Russian person or entity on the U.S. Sanctions Search List could cost a person or company a fine and even prison time.

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