A local representative for the major crypto exchange has reportedly met with Russia’s financial intelligence unit, Rosfin, with officials asking the exchange to hand over client data to “help them fight crime.” Permission to hand over data was granted by a regional head of the exchange, Reuters reported today.
At the meeting, which took place in Moscow in April 2021, Binance’s representative was asked to provide the Russian government with client data such as names and addresses of users, the report said.
According to the report, Binance’s head of Eastern Europe and Russia, Gleb Kostarev, consented to handing over client data when asked by the company representative present in the meeting, telling his colleague that he didn’t have “much of a choice.”
The meeting reportedly happened as a result of a work done by Rosfin to trace bitcoin (BTC) worth “millions of dollars” that had been raised by imprisoned Russian opposition politician Alexei Navalny, Reuters reported, citing “a person familiar with the matter.”
According to Navalny, the donations are used to finance efforts to expose corruption among Russia’s top government officials, including President Vladimir Putin.
Binance’s Kostarev did not comment on the article. However, a representative for the crypto exchange told Reuters it has never been contacted by Russia regarding Navalny.
A Binance spokesperson told Cryptonews.com that any government or law enforcement agency, Russia included, can request user data from the exchange “as long as it is accompanied by the proper legal authority.” They added that “fulfilling disclosure obligations to the authorities in each jurisdiction is a large part of becoming a regulated business and Binance fulfills its legal obligations.”
In regards to a reported Russian request, the spokesperson stated that,
“Binance reserves the right to reject law enforcement requests should they not stand up to scrutiny; this applies to all jurisdictions including Russia – Binance has not entered into any form of unusual agreement with the Russian government that differs from any other jurisdiction – these obligations are ordinary and any traditional bank for example would be subject to the same requirements.”
Binance further denied that it has “sought to actively assist the Russian state in its attempts to investigate” Russian opposition leader Alexei Navalny, and that such statements are “materially inaccurate,” stating that: “indeed the prosecution case concerning Navalny noted that no donations that were the subject of investigation related to digital currencies.”
According to an April 23 blog post by the exchange, “suggestions that Binance shared any user data, including Alexei Navalny, with Russian [Federal Security Service] FSB controlled agencies and Russian regulators are categorically false.”
The exchange said that it would be writing a formal complaint to Reuters, sharing what it claims is the full email exchange with the news agency.
Meanwhile, the exchange previously stated that it was “actively seeking compliance in Russia” before the war in Ukraine broke out. It added that this requires it to respond to “appropriate requests from regulators and law enforcement agencies.”
Legal representatives for the exchange further said that “active engagement with the Russian government has now stopped due to the conflict.”
It has been widely reported that Binance for some time has sought to gain a stronger foothold in the Russian crypto trading market. In January this year, the exchange announced that it had hired former Bank of Russia executive Olga Goncharova as its head of government relations in the country.
At the same time, Binance also took similar steps in Ukraine, hiring the former government official Kyrylo Khomiakov as its local director there.
Binance has continued to operate in Russia after the war despite requests from the Ukrainian government to ban Russian users. Binance is also one of just a few global exchanges that offer BTC and USDT trading against Russian rubles. However, as reported yesterday, Binance announced that, due to restrictive measures being placed against Russia, it is required to limit services for Russian nationals or natural persons residing in Russia, or legal entities established in Russia, that have cryptoassets exceeding the value of EUR 10,000 (USD 10,900).
Per the Saturday blog post, “as soon as the war started, [Binance] stopped working in Russia.” The exchange added that, instead, “we implemented sanction requirements. Today, as far as we know, Binance is the ONLY crypto exchange in the world to implement the latest package of sanctions imposed by the European Union aim at Russian account holders.
The article has been updated on April 25, 8:30 UTC, with comments from the Binance spokesperson and statements from Binance’s April 23 blog post. Updates in bold.