Binance, the world’s largest crypto exchange, has denied sending over client data, including names and addresses, to Russia’s Financial Intelligence Unit in April 2021, in response to a story published by Reuters on Friday.
In the Reuters report, a Russian agency known as ‘Rosfinmonitoring’ or ‘Rosfin’ was looking to track bitcoin donated to the now-jailed Russian opposition leader, Alexei Navalny – the head of a network seeking to uncover corruption in Putin’s government.
Navalny raised millions in bitcoin donations between December 2016 and February 2021 in an effort to help his foundation expose the corruption in Putin’s regime. Donations skyrocketed both after he was poisoned and later thrown in jail. The foundation has, however, been categorised as a terrorist organisation by Rosfin.
Rosfinmonitoring is nominally independent, but it functions as an arm of the Federal Security Service (FSB), the successor agency to the KGB, where Vladimir Putin himself began his career.
Rosfin approached Binance, who at the time was seeking license/approval to operate in Russia, for the details of donors to the Navalny network. Following that, in Moscow in April 2021, interactions allegedly took place behind closed doors between Russia’s financial intelligence unit and Binance’s regional head.
“Binance’s head of Eastern Europe and Russia, Gleb Kostarev, consented to Rosfin’s request to agree to share client data, the messages showed. He told the business associate that he didn’t have “much of a choice” in the matter.”
“The encounter, which has not been previously reported, was part of behind-the-scenes efforts by Binance to build ties with Russian government agencies as it sought to boost its growing business in the country. This account of those efforts is based on interviews with over 10 people familiar with Binance’s operations in Russia, including former employees, ex-business partners and crypto industry executives, and a review of text messages that Kostarev sent to people outside the company.”
Binance has defended itself against what it considers to be false allegations by Reuters.
In a blog post published Saturday, it refuted the Reuters investigation’s findings and claimed that any allegations that it provided user data to FSB-linked authorities are “categorically false”.
“Suggestions that Binance shared any user data, including Alexei Navalny, with Russian FSB, controlled agencies, and Russian regulators are categorically false.”
Binance noted that it had been actively lobbying Russian regulators to create a regulatory framework for cryptocurrency prior to Putin’s invasion of Ukraine in February.
Binance also maintained that regulated crypto exchanges need to work hand in hand with government officials.
“Any government or law enforcement agency in the world can request user data from Binance as long as it is accompanied by the proper legal authority. Russia is no different. Fulfilling disclosure obligations to the authorities in each jurisdiction is a large part of becoming a regulated business and Binance fulfills its legal obligations.”
The global exchange also claims it suspended any relationship-building initiatives with the Russian government after its military attack and didn’t sign any special agreements with Putin’s officials.
Binance also stated that it “reserves the right to reject law enforcement requests should they not stand up to scrutiny; this applies to all jurisdictions including Russia.”
In the blog post, Binance published email correspondence between Reuters and its representatives, which were part of the investigation findings. The company further said it would write a formal complaint to the news publication, citing hype and sensationalist journalism.
“Information about our users is an important part of our business and we are not in the business of selling our users’ personal information to others. Binance shares users’ personal information only as described below and with the subsidiaries or affiliates of Binance that are either subject to this Privacy Notice or follow practices at least as protective as those described in this Privacy Notice.”
There is no confirmation that Finance indeed shared any user data with Rosfinmonitoring, but Reuters noted that last April, Kostarev took a meeting with Rosfinmonitoring officials arranged by the Digital Economy Development Fund and German Klimenko, a former adviser to Russia President Vladimir Putin on internet development. And, Binance did not challenge the fact of the meeting itself.
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