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In a recent legal development, the Moscow magistrate court has taken action against Coinbase, a major US-based cryptocurrency exchange. The fines are a consequence of Coinbase’s failure to comply with Russian data localization laws, resulting in a penalty of one million rubles, roughly equivalent to $10,848.
Legal Basis: Coinbase Found Guilty of Administrative Offenses
The court determined that Coinbase violated Part 8 of Art. 13.11 of the Russian Federation’s Code of Administrative Offenses. This particular article outlines the obligations of data operators to ensure the proper recording, systematization, accumulation, and storage of personal data belonging to Russian citizens within the country.
The fines imposed on Coinbase are described as the minimum for such offenses, with potential penalties extending up to six million rubles or $65,090.
Parallel Cases: Tech Giants Also Fined
This decision follows a series of analogous fines issued by the Moscow magistrate court against other prominent technology and communication companies. Notably, in October, Zoom, a widely used video communication service, was handed a substantial fine of 15 million rubles for repeatedly refusing to localize Russian user data. In a similar vein, Telegram, a popular messaging app, faced a fine of 50,000 rubles in August. Other notable companies, including Spotify, Apple, WhatsApp, Match Group (owner of Tinder), Airbnb, Google, Twitch, and Pinterest, have all faced penalties for non-compliance with Russia’s data localization laws.
Context: Regulatory Directive and Compliance Deadline
The fines imposed on Coinbase and other tech firms align with a directive from Russia’s federal executive body responsible for media and telecommunications. In May, this executive body mandated that foreign services localize databases of Russian users within the country by July 1.
Global Compliance Efforts
Approximately 600 foreign company offices in Russia have adhered to these regulations, ensuring the localization of storage for the data of Russian citizens.
Coinbase is not the sole entity subject to financial penalties in Russia. The international association AIDA has also been fined one million rubles. These penalties underscore the stringent enforcement of data localization laws in Russia.
The financial penalties imposed on Coinbase and other major tech players highlight Russia’s commitment to enforcing data localization laws. As international entities continue to operate within its borders, compliance with these regulations remains crucial, contributing to the ongoing global discourse on data privacy and localization.
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