Binance Gave Russia A Client’s Data. It Was Used To Bring Terrorism Charges Over Ukraine Donations.

Binance provided Russian authorities with personal information and cryptocurrency transaction records belonging to a customer who was later charged with terrorism financing over donations linked to Ukraine, according to a new report citing law enforcement documents.

The case involves Yuri Belenkiy, a 49-year-old Russian IT specialist who holds a Bulgarian residency permit and is currently jailed in Russia awaiting trial.

Russian authorities allege Belenkiy transferred more than $700 in cryptocurrency to fundraising efforts supporting the Ukrainian military and a group associated with the Azov Brigade, which Moscow designates as a terrorist organization.

Reuters reported that Russian investigators requested Belenkiy's transaction history from Binance and received information confirming that he had initiated transfers to a cryptocurrency wallet promoted by exiled Kremlin critic Arkady Babchenko. The data was subsequently incorporated into the evidence supporting the terrorism-financing charges.

The information provided went well beyond transaction records, according to documents reviewed by the news agency. It included Belenkiy's date of birth, address, telephone and passport number, along with copies of his Russian passport and Bulgarian residency permit.

The crypto exchange said it cooperates with lawful information requests from law enforcement agencies around the world, subject to relevant legal, privacy and regulatory requirements. It also stressed that authorities, rather than Binance, determine criminal charges and how information is ultimately used in legal proceedings, Coindesk reported.

Responding to law enforcement requests is a normal part of operating a global cryptocurrency exchange. Binance itself says its compliance teams have processed more than 71,000 law enforcement requests and regularly assist authorities with investigations into illicit cryptocurrency activity.

But the Russian case raises a more complicated question because Binance publicly announced that it was leaving the country nearly three years ago.

The company said in September 2023 that it was selling its entire Russian business and described continued operations in the country as incompatible with its compliance strategy. It said at the time that the exit would be complete and that it would have no continuing revenue-sharing arrangement or option to buy the business back.

Documents reviewed by Reuters now indicate that Russian investigators were nevertheless able to request and receive customer information from Binance after that exit.

The disclosure has also raised questions about European privacy law because of Belenkiy's residency in Bulgaria.

Mike Bystrov, founder of crypto regulation consultancy Stellar Consulting and a lawyer who previously worked with Binance, told Reuters that Belenkiy could potentially have been protected by the European Union's General Data Protection Regulation if he was registered with Binance as an EU resident. According to Kyiv Post, Russia is not considered by the EU to provide an adequate level of personal-data protection, making transfers of personal information there subject to strict requirements.

It has not been established, however, that Binance violated GDPR. Reuters could not determine whether Belenkiy was registered with Binance as a Bulgarian resident, a potentially important factor in determining what protections applied to his information. Bulgaria's Commission for Personal Data Protection did not respond when asked whether privacy laws had been breached, while the European Data Protection Board declined to comment on the individual case.

Binance disputed the suggestion that it was not obligated to provide the information and did not comment specifically on whether its disclosure could constitute a GDPR violation.

The investigation may also have reached beyond Belenkiy. One document reviewed by Reuters showed that Russian investigators asked Binance to identify other customers who had transferred cryptocurrency to one of the wallets promoted by Babchenko. The documents did not reveal whether Binance provided those identities, and Reuters could not establish whether other customers had been identified through the exchange.