Binance, a major player in the cryptocurrency exchange business, has been forced to deny any involvement that it helped Russian authorities track down donations to Ukraine amidst the ongoing Russia-Ukraine war. The denial was issued in response to an investigation published by Reuters on Friday.
According to the article from Reuters, Gleb Kostarev, Binance head of Eastern Europe and Russia, met with agents of Russia’s anti-money laundering agency, known as Rosfinmonitoring (Rosfin). Reuters was able to review Kostarev’s messages where he “consented to Rosfin’s request to agree to share client data,” telling a colleague he didn’t have “much of a choice,”.
The article claimed that Binance may have shared the data of at least two Russian users with law enforcement in Russia, who were then able to track down and freeze their assets.
The article goes on to claim that Binance was approached by Russian authorities in early 2020 with a request for information on two individuals who had used the exchange to make donations to a Russian opposition politician.
Around the same time, Rosfin was looking at means of tracking crypto donations to the partners of Russia’s opposition leader Alexei Navalny, Reuters wrote. Opposition leader Navalny raised millions in donations from supporters, with an increase in donations after his assassination attempt and subsequent arrest in Russia in January 2021.
Binance posted on its blog last Friday that “suggestions that Binance shared any user data, including Alexei Navalny, with Russian FSB-controlled agencies and Russian regulators are categorically false,” adding that “Binance has not sought to actively assist the Russian state in its attempts to investigate Alexei Navalny.”
Binance also stated that it “will be writing a formal complaint to Reuters under their own editorial code,”.
In response to the same article, Binance CEO Changpeng Zhao took to Twitter to deny the claims, stating that: “Binance does not have an office or employees in Russia.”
He went on to say that the exchange would never share user data with any government without a court order and that they have “zero tolerance for crime or anyone operating above the law.”
The article also claimed that Binance was in talks with the Russian Central Bank about launching a “crypto-ruble,” but Zhao denied this, saying that they have had no such discussions.
This is not the first time Binance has been accused of sharing user data with government agencies. Last year, the exchange was accused of sharing user data with the Chinese government, but Zhao denied these claims as well.
Binance is one of the largest cryptocurrency exchanges in the world and has been expanding its operations to new countries and regions.
According to Reuters’ story, Binance claimed: “it had never been contacted by Russian authorities regarding Navalny.” It said that before Russia’s war with Ukraine Binance was “actively seeking compliance in Russia,” which would have required it to respond to “appropriate requests from regulators and law enforcement agencies,” the article states.
Before the start of the Russian invasion of Ukrainian borders this winter, Binance had been in talks to become a legitimate part of Russia’s crypto industry. Binance had joined several regulatory working groups and even hired the former central bank executive Olga Goncharova as its head of government relations.
After the invasion, Binance stopped accepting payments with Russia-issued Visa (V) and Mastercard (MA) bank cards, following Visa and Mastercard themselves disconnecting Russian clients from the global payments networks. On Thursday, Binance also limited Russian accounts with balances over 10,000 euros to withdrawal-only mode.
In light of these developments, the data-sharing allegations against Binance seem far-fetched. It’s more likely that Binance is simply following the lead of Visa and Mastercard, which have both been very cautious in their dealings with Russia since the annexation of Crimea.
We will continue to closely follow updates on the issue.