Kraken CEO states that the exchange will not close Russian accounts unless legally mandated to do so.

• A few crypto exchanges, including Kraken, are not enforcing an outright ban on Russian accounts.
• Kraken's co-founder and CEO, Jesse Powell, argues that the exchange is in compliance with legal sanctions but indiscriminate bans are unjust towards ordinary Russians who may not support their country's invasion of Ukraine.
• "The CEO states that shutting off someone's financial access is a serious matter, beyond merely restricting their music streaming service or photo sharing app."

The CEO of one of the world's largest cryptocurrency exchanges stated that the exchange will not close Russian accounts unless directed to do so by the State Department.

Jesse Powell, CEO and co-founder of Kraken, stated that the company is adhering to legal sanctions requirements and is collaborating with law enforcement to prevent banned accounts from slipping through the cracks. However, Powell believes that total bans are unjust towards ordinary Russians who may not support their country's invasion of Ukraine.

"Kraken's CEO stated in an interview with CNBC's Crypto World that shutting off someone's financial access is a serious matter, beyond just restricting their music streaming service or photo sharing app."

The United States, U.K., and European Union have imposed penalties on Russia to pressure President Vladimir Putin to abandon plans to attack Ukraine. These penalties include cutting Russia off from the SWIFT global payments communication system, and major banks, conglomerates such as Visa and Mastercard, have stopped doing business in Russia.

Payment companies are legally allowed to operate in the country, but if their accounts are placed on a sanctions list, they must comply with the restrictions. If the U.S. and NATO allies imposed country-wide bans, such as those on North Korea and Iran, Powell stated that the exchange would shut down.

"We will freeze accounts legally, but sanctioning individuals hasn't been effective as it hinders their ability to pay rent, debts, buy food, and support their family."

Ukrainian officials have called on the industry to intervene. Vice Prime Minister Mykhailo Fedorov issued a tweet urging major crypto exchanges to block addresses and stated that it is "essential to freeze not only the addresses associated with Russian and Belarusian politicians, but also to disrupt ordinary users."

Kaiko reports that transactions in the Russian ruble and Ukrainian hryvnia have increased since the conflict began, indicating a rise in demand. Despite the conflict, Binance and FTX continue to operate in Russia, according to data from Kaiko.

The spokesperson for Binance stated that the exchange will not arbitrarily freeze the accounts of millions of innocent users, but will only block accounts of individuals on sanctions lists while ensuring full compliance with all sanctions.

Coinbase CEO Brian Armstrong stated on Thursday night that the exchange was not proactively prohibiting all Russians from using the platform.

"Armstrong tweeted that everyone should have access to basic financial services unless the law prohibits it, and if the U.S. government imposes a ban, they will comply with those laws."

Some members of Congress have raised concerns about the use of cryptocurrencies by Russia to evade sanctions. Elizabeth Warren and three other senators wrote a letter to the Treasury Department requesting information on how they are monitoring the industry and its potential impact on enforcing sanctions.

The industry has also rejected this claim, with Kraken's Jesse Powell stating that it is a "misunderstanding" by those in Washington who "do not comprehend the workings of cryptocurrency" and "do not understand how regulated the space already is."

"Politicians have an outdated view of the tech industry, as they still hold the perspective of ten years ago when it was in its infancy, Powell stated. The industry is heavily regulated and traceable, but politicians have not kept up with its current state."

-- CNBC's Arjun Kharpal contributed reporting.