Binance pushes back against a Reuter’s report allegation

TL;DR Breakdown

• Reuters published a special report on Friday claiming Binance agreed to hand over users` information to Russian intelligence.
• Binance responds by refuting all claims as “categorically false.”

On Friday, Reuters ran a “Special Report” alleging that Binance, the world’s largest cryptocurrency exchange, had given Russian authorities user data on Bitcoin donations linked to opposition politician Alexei Navalny last year.

Reuters` special report on Binance ties to FSB-linked agency

Binance swiftly rebuked the allegations made in the Reuters story, issuing a statement shortly after. The crypto exchange published an additional detailed explanation on its blog later. It disavowed any and all assertions made by the Reuters article.

The exchange claims that the story, circulated by one of the world’s most reputable and trustworthy news outlets, contradicts everything the outlet has built up over time. It also notes that this news article isn’t representative of their experience working with thousands of other journalists at the entity.

According to the Reuters report, the Russian agency charged with combating money laundering, Rosfin, attempted to track millions of dollars in Bitcoin amassed by imprisoned Russian opposition figure Alexei Navalny. In 2018, Navalny declared his candidacy for president and was soon poisoned, with indications pointing to the Federal Security Service (FSB).

Between December 2016 and February 2021, anti-corruption campaigner Alexei Navalny raised 658 bitcoins (BTC), a sum worth $26 million. Donations increased dramatically after presumed government entities poisoned him in March 2018. Bitcoin and crypto donations are popular funding alternatives for pro-democracy campaigners in Russia.

The Russian invasion of Ukraine in February has made the state persona non grata across the world, despite the fact that much of the world saw Russia and its president, Vladimir Putin, as authoritarian in 2021. Western sanctions have hurt economic growth and caused the ruble’s value to fluctuate on a rollercoaster for more than two months.

According to the article, Russia’s financial intelligence unit met with Binance’s regional boss in Moscow. The Russians requested that Binance provide client information, including names and addresses, to aid them in fighting crime. The trail leads back to text messages sent by a company executive to a business associate.

According to the emails, Gleb Kostarev, the head of Eastern Europe and Russia at Binance, agreed to Rosfin’s request to share client data. In a text message, Mr. Kostarev informed his business associate that he had little leeway in the issue.

Later, Rosfinmonitoring included Navalny’s network on a list of terror groups. In addition, Rosfin claimed that the network used donations to finance efforts to expose government corruption.

Since President Putin sent Russian troops into Ukraine on February 24, the exchange has stayed in operation in Russia. Despite the demand from Kyiv’s government that Binance and other exchanges ban Russian clients, the operations continue.

Binance sets the record straight 

To be transparent, Binance has published a purported complete email correspondence between the exchange and Reuter’s journalist Angus Berwick, who co-authored the piece in question, alongside Tom Wilson. The exchange also responded to numerous queries posed by Berwick in a succession of back-and-forth emails.

Binance responded, emphasizing several of the “misrepresented” claims. The exchange stated that any allegations of Binance sharing user data, including Alexei Navalny, with Russian FSB-controlled agencies and regulators are “categorically false.”

Binance claims that it was engaged in efforts to create a regulatory framework for Bitcoin in Russia. It also defended the need for regulated exchanges to collaborate with governments, declaring that it does not rubber-stamp requests. However, if necessary, it reserves the right to reject law enforcement requests should they not withstand scrutiny.

The crypto exchange further defended its position, claiming that it contributed time and more than $10 million to the relief effort for Ukraine’s civilians. Binance stated that it would be submitting a formal complaint under its editorial code against the Reuters article.

Today, 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 […] Binance has not entered into any form of unusual agreement with the Russian government that differs from any other jurisdiction.

the report stated.

Many Twitter users were critical of Binance’s initial reaction to the study. At least one person said that Russia’s attempts to implement pro-crypto policies could be linked to its reported efforts to gain access to user data, allowing citizens to use cryptocurrency to monitor transactions.

Additionally, Binance announced restrictions on Russian citizens and residents in line with EU sanctions. The affected accounts will be unable to deposit or trade using Binance’s spot, futures, custody wallets, and staked and earned deposits. Finally, the released blog article states:

We don’t expect news coverage always to be positive or even balanced. But we expect it to be fair and accurate. In this case, the article has been carefully written with a narrative in mind that provides just enough balance possible to try to avoid a legal complaint.

as stated in the report.