Crypto Giant Binance Gave Client Data To Russian Intelligence
In April 2021, Russia's financial intelligence unit met in Moscow with the regional head of Binance, the world's largest crypto exchange.
Photo Insert: CEO Changpeng Zhao (a.k.a. CZ)
The Russians wanted Binance to hand over client data purportedly to help them fight crime, text messages the company official sent to a business associate, Angus Berwick and Tom Wilson reported for Reuters.
At the time, the agency, known as Rosfinmonitoring or Rosfin, was seeking to trace millions of dollars in bitcoin raised by jailed Russian opposition leader Alexei Navalny, a person familiar with the matter said.
Navalny, whose network Rosfinmonitoring added that month to a list of terrorist organizations, said the donations were used to finance efforts to expose corruption inside President Vladimir Putin's government.
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.
Binance told Reuters it had never been contacted by Russian authorities regarding Navalny. It said that before the war it was "actively seeking compliance in Russia," which would have required it to respond to "appropriate requests from regulators and law enforcement agencies."
CEO Changpeng Zhao, widely known by his initials CZ, has said he is against the war and "politicians, dictators that start the wars" but not against "the people on both sides of Ukraine and Russia that are suffering." Zhao didn't comment for this article. Binance referred Reuters to Zhao's previous statements on 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, Reuters reporting shows.
This account of those efforts is based on interviews with more than 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.