Reuters: Binance cooperates with the FSB and Rosfinmonitoring
The regional office of the cryptocurrency exchange Binance agreed to share information about Russian customers with Rosfinmonitoring and the FSB in exchange for assistance in doing business on the territory of the state. Reuters reports, citing former company employees and other informed sources.
In response to ForkLog’s request, a Binance spokesperson said that law enforcement authorities in any jurisdiction may request customer data if these requests are supported by the relevant legal powers. The company emphasised that \”Russia is no different.\”
\”Binance reserves the right to reject requests from law enforcement agencies if they fail the checks. This applies to all jurisdictions, including Russia — Binance has not entered into any special arrangements with the Russian government,\” said a company spokesperson.
Binance also added that the company \”did not seek to actively assist\” the Russian authorities in investigating Navalny’s activities.
According to the agency, in April 2021 Binance regional director Gleb Kostarev, who at the time held the post of director for Eastern Europe, held a meeting with Rosfinmonitoring representatives.
Kostarev allegedly agreed to share client data and create a local division in Russia through which authorities could request access to this information. In discussing with a partner he stressed that he had \”not been left with much choice\”.
Andrey Tugarin, managing partner at GMT Legal, told ForkLog that handing Binance data to Rosfinmonitoring is an expected move, which, however, will not affect investors legally operating with digital assets.
\”Data sharing of user information by exchanges with government bodies is standard practice in many countries. It is one of the minimal risks to consider when trading cryptocurrency. Yet most users will not be harmed by this action, as they have not violated the law, including anti-money-laundering rules,\” he noted.
Tugarin reminded that customer data may also be shared with other supervisory authorities, such as the Federal Tax Service. A lawyer advised those who, in 2021, earned income from cryptocurrency operations and converted funds to fiat to file a 3-NDFL tax declaration.
\”Declaring your legal income is another very workable and effective mechanism for confirming the source of funds,\” he emphasised.
During that period Rosfinmonitoring sought to track cryptocurrency donations directed at opposition politician Alexei Navalny.
In a conversation with Reuters, a Binance spokesperson noted that Russian authorities had not approached the company on Navalny-related questions. He said the exchange strives to comply with the laws of the jurisdictions where it operates — this includes responding to \”relevant requests from regulators and law enforcement agencies\”.
This is not Reuters’ first investigation into Binance. In January 2021, Reuters journalists claimed that the company repeatedly concealed information from regulators, neglected KYC procedures and acted contrary to the recommendations of its own compliance department.
Earlier in February, Binance joined the Expert Council of the Association of Banks of Russia on cryptocurrencies.
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