As the Kremlin sequesters funds to the opposition, Bitcoin serves to run blockades.
Alexei Navalny is a noted leader of the Russian opposition. His “Anti-Corruption Foundation” (FBK) has been a thorn in President Vladimir Putin’s side for many years.
Though the FBK has been locked out of mainstream politics — much as Navalny has been blocked from running in recent elections — its investigations have managed to garner an audience that Putin has found stubbornly difficult to disperse. That audience has transformed into protests across the country.
On top of it all, Navalny’s story highlights an important use case for Bitcoin in a country that effectively sanctions media that don’t toe the official line. Long touted as a means of getting money to people subject to government oppression, Bitcoin should be a serious consideration for journalists in Russia, many of whom face a regime that is going to great lengths to silence and effectively sanction them.
A recent timeline of Navalny
Navalny’s FBK went on the Russian Ministry of Justice’s “Foreign Agents” list at the end of 2019. Navalny has said that continuous fines as a result of that status will force him to close down FBK, and possibly re-open it under a different name. At the moment, however, Navalny’s primary concern is his current incarceration.
Russian authorities arrested Alexei Navalny on Jan. 17, as the opposition leader returned from Germany where he’d been treated for Novichok poisoning that he attributes to Kremlin agents. Immediately afterwards, Navalny’s team released an investigation into a palatial estate near the Black Sea that they allege belongs to Putin.
On Feb. 2, Navalny was sentenced to two years and 8 months in jail on trumped-up charges over a sentence suspended in 2013 for embezzlement. Russian law, moreover, prevents anyone with such a record from running for political office (which many identified as the true motivation for the conviction eight years ago). This past weekend, a court rejected his appeal and fined him another 850,000 rubles ($11,000) for a separate charge of defaming a veteran. The veteran in that case had appeared in a pro-Putin ad that Navalny had criticized.
It has also come to light that a Bitcoin address associated with Navalny has seen a surge in donations since his poisoning in August and especially following his arrest last month.
Leonid Volkov, a long-time ally of Navalny’s and a project manager for the FBK specified to Cointelegraph that the Bitcoin in question goes “to fund the operations of Navalny’s political offices across the country (not the FBK!).” Why, you might ask? The FBK only accepts donations from bank cards issued to Russian citizens which, Volkov said, “makes the whole ‘foreign agent’ story especially stupid.”
The Bitcoin donations go to Navalny’s network of outposts across Russia, which conduct independent local investigations into corruption but which are not financially bound to the FBK. Volkov further specified that he, not Navalny, is the proprietor of the Bitcoin wallet, which is related to the whole issue of foreign funding:
“The network of Navalny offices was never recognised [as] a foreign agent. I accept these bitcoin donations as a Russian citizen, then I go to localbitcoins and sell them for Russian Roubles, and, finally, I donate these roubles as a Russian citizen to the legal entity, which operates the network of regional Navalny offices.”
The whole system seems to work for now, even though Volkov says that BTC has never been more than 15% of their donations in a given year.
Beyond just facilitating a wider net for fundraising, the Navalny team’s use of Bitcoin has implications for an ever-expanding circle of opposition voices in Russian media who are seeing their revenue scrutinized or cut off. The Putin regime is eagerly converting the “foreign agents” list into a mechanism for financially sanctioning Russian citizens involved in opposition politics. Despite limited adoption in the country’s donations, the problems of funding journalism in modern-day Russia clearly show a use-case for Bitcoin adoption.
The “Foreign Agents” list
Russia has maintained a growing list of “Inoagents,” or “foreign agents,” since 2012. Originally, these were NGOs engaged in political activity, which the regime accused of receiving funding from abroad. 74 entities are in the current list. Alongside Navalny’s FBK, it includes a number of non-profits working against the spread of HIV and educating the public about sexual assault. In 2017, the list expanded to media outlets linked to the U.S.-funded Radio Free Europe/Radio Liberty and Voice of America families.
When an organization appears in the foreign agents list, any time their work or message is broadcast in Russia, it must feature a lengthy disclaimer that identifies the source as a foreign agent. This is a major interference to NGOs trying to run public campaigns and a death knell to many journalistic projects who depend on both brevity and credibility in order to reach an audience. Designated foreign agents must also make intensive budgetary disclosures every quarter.
This past December, new amendments allowed authorities to put individual journalists on the list.
“People still remember what happened during the Stalin times, with the label ‘vrag naroda,’ and this is something similar to that,” Gulnoza Said told Cointelegraph, referring to a weighted Soviet term that translates to “enemy of the people.”
An attack on journalism
Said coordinates the Committee to Protect Journalists’ Europe and Central Asia programs, which includes grants to journalists in emergency situations — oftentimes life or death. “At times it’s been very difficult for us to send money to Russian journalists,” she said. “Russia doesn’t have the same international banking system as everyone now.”
On Feb. 18, Reporters Without Borders denounced still more changes coming to expand the foreign agents law. Jeanne Cavelier, the head of RSF’s Eastern Europe and Central Asia desk, said:
“This law is so vague and its scope is so broad that, in the absence of exhaustive verification of its application, the authorities will be able to choose their targets and impose insane fines on whomever they see fit.”
Denis Kamalyagin is the editor-in-chief of newspaper Pskovskaya Guberniya and one of the journalists added to the foreign agents list in December. Kamalyagin told Cointelegraph he was now required to file quarterly reports on income and expenses, a process that has not been standardized. “There is no template yet, so everyone filled theirs out after their own fashion,” he said. It likewise remains unclear what sort of fines the government will level at the Inoagents if they do not file in accordance with the new demands. The new laws, however, include a punishment of up to 5 years in jail for failure to file.
Meanwhile, “foreign agent” has already proved a remarkably expansive term. The “journalists” added to the list in December included one Daria Apakhonchich, an artist and teacher with the Red Cross whose crime seems to have been political posts on social media. The Red Cross has since fired her.
While the financial burden and scrutiny placed upon “foreign agents” is obvious, the Putin regime’s usage of the list clearly functions as a form of financial sanctions upon public figures opposed to the regime. To fulfill new opaque reporting requirements, Kamalyagin said he was filing for a joint LLC with Apakhonchich and another listed journalist, Sergey Markelov to be registered in Pskov. But that’s hardly the end of either the “foreign agents” list’s requirements, nor the sorts of sanctions available.
Regarding the prospect of further expansion of the governmental list, Gulnoza Said said, “Next in line is anybody who has been critical of the Russian authorities, and they are going to be included in this list unless they are already in some other list.”
Critical to this conversation is Svetlana Prokopyeva, a journalist from Pskov who formerly worked at Kamalyagin’s Pskovskaya Guberniya and more recently at Radio Liberty. Prokopyeva ended up on Russia’s list of extremists after comments she made in an interview asking about the origin of a suicide bombing in 2019. A court found her guilty of “justifying terrorism.”
Initially facing an 8-year jail sentence, Prokopyeva instead received a half-million ruble ($6,700) fine last summer — which is roughly a year’s income for the average Russian. A military court overturned Prokopyeva’s appeal at a hearing earlier this month, during which the prosecutor labeled the journalist “a mouthpiece of the West.” Despite not doing time, Prokopyeva is now labelled an extremist. More intensive than the foreign agent list, Prokopyeva’s bank accounts remain frozen and her passport confiscated along with all of her equipment.
Unable to work and prohibited from accessing her money, Prokopyeva had limited avenues to pay the fine. Prokopyeva noted that sending money directly to her could legally constitute terrorist financing, so she turned to her mother, who used an account with mobile bank Tinkoff to receive donations to pay her daughter’s fine — likely possible because the mobile-only Tinkoff is less concerned with the risk of internal “political exposure” than the more regime-tied brick-and-mortar banking giants of the Russian Federation.
Despite managing to pay her fine with her mother’s help, Prokopyeva will remain on the terror list for a year. And despite still having access to their bank accounts, the journalists recently added to the list of foreign agents are still waiting to learn what sort of fines are awaiting them.
A consistent criticism of Bitcoin from authorities is that it facilitates sanctions evasion and money laundering. If you were looking to stand up for the Putin regime’s behavior in this area, you could paint Bitcoin as a mechanism to launder money rather than a politically neutral means of transferring value.
While there’s no fair reason to respect Putin’s sanctions on journalists anyway, the point is not that Bitcoin can provide and hide foreign funding to malignant entities of the people. The point is that ending up on the “foreign agents” list has little to do with where any of these people’s money is coming from and has everything to do with who they have angered. So here, Bitcoin is a promising safety mechanism for an industry in danger.