Major crypto exchange Binance questioned the veracity of a report saying one of its regional heads agreed to provide Russia’s Financial Intelligence Unit with customer data potentially related to donations to the anti-corruption and anti-Putin Activists Alexei Navalny stand.
Reuters reported Friday that Gleb Kostarev, Binance’s head of Eastern Europe and Russia, met with officials from Russia’s Rosfinmonitoring, a financial surveillance service linked to the country’s Federal Security Service (FSB), in April 2021. Kostarev reportedly agreed to a request from the government agency to release certain user details — including names and addresses — and later told an employee that he “didn’t have much choice” on the matter. However, another unnamed crypto exchange reportedly declined to share customer data with Rosfinmonitoring amid concerns over the use of the information as well as the entity’s ties to the FSB.
Rosfinmonitoring may have been trying to obtain information from users who donated Bitcoin (BTC) to Navalny, who is currently being held in Russia after being found guilty of contempt of court and embezzlement in March. Many human rights groups, including Amnesty International, have claimed the charges are politically motivated, as Navalny directly criticized Russian President Vladimir Putin over corruption and accused the head of state of being responsible for his August 2020 poisoning.
However, in a Friday blog post, Binance hinted that the report contained a “misrepresentation” that offered “just enough balance to try to avoid a legal complaint.” The firm said it was “categorically wrong” that it shared user data with “Russian FSB-controlled agencies and Russian regulators” and halted its work in Russia after the country’s invasion of Ukraine on February 24.
“Today, any government or law enforcement agency in the world can request user data from Binance as long as it is accompanied by the appropriate legal authority. Russia is no different […] Binance has not entered into an unusual agreement with the Russian government, unlike any other jurisdiction.”
Binance released the email exchanges between Reuters and its spokespersons that were part of the research for the report. The company also said it would write a formal complaint to the news outlet, accusing it of “hype” or sensationalist journalism.
Prior to this statement, many Twitter users seemed critical of Binance’s response to the report. At least one person allegedly that Russia’s moves to introduce pro-crypto regulations may be related to its reported attempts to gain access to user data, i.e. to allow citizens to use crypto to track transactions.
“Russia likes crypto when the US dollar is capped but hates it when it is used to fund political opposition.” called Michael Bond, attorney and Canadian citizen.
“This is an immersive look at the pressures that the [Federal Security Service] can count on the head of a company in Russia, while the organizational leadership outside of Russia has *no idea* what is going on.” called Twitter user Zach Edwards.
Idea: Cryptocurrency creates a decentralized financial system independent of banks and regulators, protecting privacy and funding of political speech
Reality: Your cryptocurrency broker leaks Navalny supporters’ data to the FSB without their knowledgehttps://t.co/tsXLzv74OB
— max seddon (@maxseddon) April 22, 2022
The report followed Binance’s announcement of restrictions on Russian nationals and residents in line with sanctions imposed by the European Union. Affected accounts will not be able to fund or trade Binance’s spot, futures, and custody wallets, as well as wagered and earned deposits.
Related: Binance Manager Leads Crypto Expert Center of Russian Banking Association
Binance CEO Changpeng Zhao previously said the crypto exchange will comply with sanctions imposed by the United States and European Union on Russia-based companies and individuals, but will not “unilaterally freeze millions of accounts of innocent users.” At the time of publication, the CEO has not publicly responded to the report.