Alexei Navalny is a well-known leader of the Russian opposition. His “Anti-Corruption Foundation” (FBK) has been a thorn in the side of President Vladimir Putin for many years.
Although the FBK has been banned from mainstream politics – just as Navalny was prevented from running in the last election – its investigation managed to attract an audience that Putin stubbornly found difficult to disperse. This audience has turned into protests across the country.
Additionally, Navalny’s story highlights an important use case for Bitcoin in a country where media that do not follow the official line are effectively sanctioned. Bitcoin has long been touted as a means of bringing money to people facing government repression. It should be serious consideration for journalists in Russia, many of whom face a regime that is making great efforts to silence and effectively sanction them.
A current timeline from Navalny
At the end of 2019, the Navalny FBK was put on the list of “foreign representatives” of the Russian Ministry of Justice. Navalny has stated that ongoing fines due to this status will force him to close the FBK and possibly reopen it under a different name. For now, however, Navalny’s main concern is his current incarceration.
Russian authorities arrested Alexei Navalny on January 17 when the opposition leader returned from Germany, where he had been treated for novichok poisoning, which he attributes to Kremlin agents. Immediately thereafter, Navalny’s team released an investigation into a palace near the Black Sea that they claim belongs to Putin.
On February 2, Navalny was sentenced to two years and eight months in prison on trumped-up charges of embezzlement in 2013. Additionally, Russian law prevents anyone with such a record from running for political office (which many identified as the real motivation for conviction eight years ago). A court dismissed his appeal last weekend and fined him an additional 850,000 rubles ($ 11,000).
It has also been found that a Bitcoin address associated with Navalny has seen a surge in donations since he was poisoned in August, and particularly after his arrest last month.
Leonid Volkov, a longtime ally of Navalny and FBK project manager, told Cointelegraph that the bitcoin in question is “intended 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, according to Volkov, “makes the whole story of” foreign agents “particularly stupid.”
The bitcoin donations go to Navalny’s network of outposts across Russia that conduct independent local corruption investigations but are not financially tied to the FBK. Volkov went on to state that he, not Navalny, is the owner of the Bitcoin wallet, which relates to the whole foreign funding issue:
“The network of Navalny offices was never recognized [as] a “foreign agent”. I accept these bitcoin donations as a Russian citizen, then go to local bitcoins and sell them for Russian rubles. Finally, as a Russian citizen, I am donating these rubles to the legal entity that runs the network of regional navalny offices. “
The whole system seems to be working for now, even though Volkov says that BTC never made more than 15% of its donations in any given year.
The Navalny team’s use of bitcoin not only enables a wider network for fundraising, but also has an impact on an ever-growing circle of opposition voices in Russian media whose earnings are being reviewed or cut off. The Putin regime is diligently converting the list of “foreign agents” into a financial sanctioning mechanism for Russian citizens involved in opposition politics. Despite the limited acceptance of the country’s donations, the problems of funding journalism in Russia today clearly shows a use case for bitcoin adoption.
The “Foreign Representatives” list
Since 2012 Russia has kept a growing list of “inoagents” or “foreign agents”. Originally, these were NGOs that were politically active and that the regime accused of receiving funds from abroad. There are 74 entities in the current list. In addition to Navalnys FBK, there are a number of non-profit organizations that work against the spread of HIV and educate the public about sexual assault. In 2017, the list was expanded to include media associated with the US-funded Radio Free Europe / Radio Liberty and Voice of America families.
If an organization is on the list of foreign agents, each time it broadcasts its work or message in Russia, it must include a long disclaimer identifying the source as a foreign agent. This is a major disruption for NGOs trying to run public campaigns and a death knell for many journalistic projects that rely on both brevity and credibility to reach an audience. Designated foreign agents must also provide detailed information on the budget every quarter.
Last December, new changes allowed authorities to add individual journalists to the list.
“People still remember what happened to the vrag naroda label during the Stalin era, and it’s similar,” Gulnoza Said told Cointelegraph, referring to a weighted Soviet term meaning “enemy of the people” .
An attack on journalism
Said coordinates the program to protect journalists’ Europe and Central Asia programs, which includes grants for journalists in emergency situations – often life or death. “Sometimes it was very difficult for us to send money to Russian journalists,” she said. “Russia now doesn’t have the same international banking system as everyone else.”
On February 18, Reporters Without Borders denounced other changes to expand the law on foreign agents. Jeanne Cavelier, Head of RSF’s Eastern Europe and Central Asia Office, said:
“This law is so vague and so broad that, without a full review of its application, the authorities will be able to choose their targets and impose insane fines on anyone they see fit.”
Denis Kamalyagin is the editor-in-chief of the Pskovskaya Guberniya newspaper and one of the journalists added to the list of foreign agents in December. Kamalyagin told Cointelegraph he is now required to file quarterly reports on income and expenses, a process that has not been standardized. “There is no template yet, so everyone has completed their template in their own way,” he said. It also remains unclear what kind of fines the government will impose on the Inoagents if they fail to comply with the new demands. However, the new laws provide for a sentence of up to 5 years in prison if no documentation is submitted.
In the meantime, “foreign agent” has already proven to be a remarkably expansive term. One of the “journalists” added to the list in December was Daria Apakhonchich, an artist and teacher with the Red Cross, whose crimes appeared to have been political posts on social media. The Red Cross has since fired her.
Financial sanctions
While the financial burden and control of the “foreign agents” is evident, the Putin’s regime’s use of the list clearly functions as a form of financial sanctions against public figures who oppose the regime. In order to meet the new opaque reporting obligations, Kamalyagin registered a joint LLC with Apakhonchich and another listed journalist, Sergey Markelov, to be registered in Pskov. However, this is hardly the end of the requirements of the list of “foreign agents” or the type of sanctions available.
Regarding the prospect of further enlargement of the government list, Gulnoza Said said: “The next in line is anyone who criticizes the Russian authorities and they will be included on this list unless they are already on another list.”
Crucial to this conversation is Svetlana Prokopyeva, a journalist from Pskov who previously worked at Kamalyagins Pskovskaya Guberniya and more recently at Radio Liberty. Prokopyeva landed on the list of extremists in Russia after asking about the origin of a suicide attack in 2019 in an interview. A court found her guilty of “justifying terrorism”.
Prokopyeva, who initially faced an 8-year prison sentence, was instead fined half a million rubles ($ 6,700) last summer – roughly the equivalent of an annual income for the average Russian. A military court overturned Prokopyeva’s appeal at a hearing earlier this month at which the prosecutor described the journalist as the “mouthpiece of the West”. Although Prokopyeva does not have time, he is now called an extremist. Prokopyeva’s bank accounts are more intense than the list of foreign agents and remain frozen and her passport is confiscated along with all her equipment.
Prokopyeva was unable to work and had no access to her money. She had limited options in paying the fine. Prokopyeva noted that sending money directly to them could legally constitute terrorist financing. So she turned to her mother, who received donations through an account with the mobile bank Tinkoff, to pay her daughter’s fine – probably because Tinkoff only cares about mobile devices – the risk of internal “political exposure” more than that of the regime marked stationary banking giants of the Russian Federation.
The future
Despite the fact that Prokopyeva managed to pay her fine with the help of her mother, she remains on the terror list for a year. And although the journalists recently added to the foreign agent list still have access to their bank accounts, they are still waiting to find out what fines are waiting for them.
A consistent criticism of Bitcoin from the authorities is that it makes it easier to circumvent sanctions and money laundering. If you want to stand up for the Putin’s regime’s behavior in this area, you could call Bitcoin a mechanism for laundering money rather than a politically neutral means of transferring value.
While there is no fair reason to respect Putin’s sanctions against journalists anyway, the point is not that Bitcoin can feed and hide malicious entities of the people with foreign funds. The point is, showing up on the “foreign agent” list has little to do with where these people’s money is coming from, and everything to do with who they pissed off. So Bitcoin is a promising security mechanism for a vulnerable industry here.
