Russian Courts Slap Coinbase with $11,000 Fine Over Data Localization Refusal

In a recent development, the Moscow District Court has imposed a fine of approximately US$11,000 on the US cryptocurrency exchange Coinbase for its failure to localize the data of Russian users within the country. This move is part of a broader crackdown on foreign services that have not complied with Russia’s data localization laws.

According to Russian media reports, the court also fined the international association AIDA International in connection with the same issue, underscoring the severity with which Russian authorities are approaching data localization compliance.

The court found both Coinbase and AIDA International guilty of administrative offenses under Article 13.11 of the Russian Code of Administrative Offenses, specifically for “failure by the operator, when collecting personal data, to fulfill the obligation to record, systematize, accumulate, store data of Russian citizens.” The fines levied, amounting to 1 million rubles each, are the minimum prescribed by this article, with companies potentially facing penalties of up to 6 million rubles.

This development follows a pattern of fines imposed on several other prominent international companies for similar non-compliance issues. In October, the Moscow District Court fined video communication service Zoom 15 million rubles for repeated refusal to localize Russian user data within the country. In August, the popular messaging app Telegram was also fined 50,000 rubles for a similar offense.

The legal actions stem from a directive issued by the Russian Federal Service for Supervision of Communications, Information Technology, and Mass Media (Roskomnadzor) in late May. The directive required all foreign services to localize the databases of Russian users within Russia by July 1. According to information from the Russian news agency TASS, approximately 600 foreign companies have complied with this requirement, localizing the storage of personal data for Russian users in Russia.

The list of fined companies includes not only Coinbase, Zoom, and Telegram but also industry giants like Spotify, Apple, WhatsApp, Airbnb, Google, Twitch, Pinterest, and others. The fines reflect a concerted effort by Russian authorities to enforce data localization laws and ensure that the personal information of Russian citizens is stored within the country’s borders.

As the July 1 deadline approaches, it remains to be seen how other international companies will respond to these stringent data localization requirements and whether further fines will be imposed by Russian authorities. The situation underscores the ongoing challenges faced by global tech companies in navigating the complex landscape of data privacy regulations across different jurisdictions.

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