Emily Mellen 00:07

Welcome to Global Research Bytes in a special crossover episode with the Democracy in Danger podcast, part of UVA’s Democratic Futures Project, on the role of cryptocurrency in the activism landscape. I'm Emily Mellen, and I'm here with Darden Professor Ian Appel and Anna Chekhovich, financial director of Alexei Navalny’s Anti-Corruption Foundation from Russia and current Democratic Futures Project visiting guest.

Ian, could you start us off by telling us what cryptocurrency is and how it has generally been used?

Ian Appel 00:34

Sure. So, when people think of cryptocurrency, oftentimes what they have in mind is Bitcoin. And so bitcoin is the oldest and largest cryptocurrency by market capitalization. And so, if you we take a step back for a moment and think about, well, if you go to and Buy a Bitcoin, if you open up a Robinhood account or go to a broker and buy bitcoin, what do you actually get? And so, when you buy a Bitcoin, what you're buying is an entry on a digital ledger, meaning that, suppose Alice owns one Bitcoin and Bob owns one Bitcoin, and Alice sends half a Bitcoin to Bob. This digital ledger is updated to say, okay, now Alice has half a Bitcoin and Bob has one and a half. And so, you don't actually receive anything physical when you go out and buy a Bitcoin. All you're receiving is an entry on this digital ledger. Now, when you actually think about it, this isn't that different from a lot of other financial transactions. Imagine Alice and Bob are instead transacting on Venmo, and Alice sends some money to Bob via the app. Well, all Venmo is doing is updating a ledger to say, okay, well now Alice's balance has gone down and Bob's has gone up. Now, what's really different about a Bitcoin transaction, as opposed to a typical, traditional financial transaction like that Venmo transaction, is the fact that bitcoins ledger is updated in a decentralized manner. And so, what that means is there's not a single entity that controls this bitcoin ledger. Rather, it's a whole group of entities that are called miners that are responsible for updating the ledger. And so that means that, in contrast to a Venmo transaction, well, there's not a single entity that controls Bitcoin. There is no sort of Bitcoin, incorporated you can call up in order to dispute a transaction. Once a transaction is put on that ledger, it's finalized. And so that's sort of a key component of many crypto currencies, like Bitcoin, is the effect, is the fact that they're not controlled by a centralized entity. Now, like I said before, there's a lot of different flavors of crypto currencies, but most share this same general characteristic.

Emily Mellen 03:11

Thank you, Ian, that's really helpful. Now that we have that background, Anna, could you tell us briefly what the Anti-Corruption Foundation is and how it started using cryptocurrency, Bitcoin specifically, and why Bitcoin has been helpful?

Anna Chekhovich 03:24

So, the Anti-Corruption Foundation is the organization that was founded by the leader of Russian opposition, Alexei Navalny, back in 2011 in Moscow. And the main goal of the organization is to defeat the Putin regime. And the organization keeps working and fighting, even after, after Alexei Navalny was killed in a Russian prison a year ago, and we have lots of opposition projects related to exposing the corruption of Russian authorities. There are crimes, there are war crimes, and we have a big media outlet, and we are a big organization. There are 130 people working in our foundation. We live and work in exile in Europe, and I joined the Anti-Corruption Foundation back in 2017 and now I still work there as a CFO, so I manage our financial operations, and we began using Bitcoin in our work in 2016 when Alexei Navalny announced his participation in the presidential elections, and we began our crowdfunding campaign. And it was a huge campaign. We had more than 300 employees, we had more than 40 offices in every big city of Russia, and we had to make lots of payments. We paid salaries, we paid rent, we paid for organizing protest rallies, and we had a very big budgets, and we were doing crowdfunding campaign, and some of our supporters wanted to remain anonymous, because it was crystal clear that it wasn't safe to support us, because we were the main threat, and we are still the main threat to Putin's regime. And some of our supporters were just simply scared to donate Russian rubles to us, and some people just prefer to use Bitcoin to support us. And we always use this Bitcoin donations as a Plan B, because many times the Russian government used the banking system as a tool of oppression against us. They attacked us by blocking our bank accounts, freezing our money. And it happened so many times, and I, as a financial manager, had to deal with these problems all the time. The first time when it happened, it was in 2019. I just refreshed the web page of our online bank, I had wanted to pay salaries or something like that. And I opened the online bank, and I saw the negative balance of minus 1 trillion rubles, which was approximately minus $13 billion at that moment. And, like, a second ago, we had a positive balance containing all of our savings. And just like that, the next moment, there is a negative 999, and the number was so big, I didn't even know what the number was, and I was so shocked, and I called to the bank, I asked them, “What is going on?”, and they couldn't, couldn't provide any explanation. They just told me, your bank account is under arrest, and only the next day they provided legal papers with the decision of the court, so they blocked our bank account one day before the decision of the court, which means they did it by someone's demand. Someone just called to the bank and told them to arrest our bank account. And of course, the criminal case was fabricated against our organization, and the Russian government realized very quickly that it's the easiest way to stop us from doing our work by depriving us of access to money. Because if you don't have access to money, you're like deprived of oxygen, you cannot pay salaries, and people cannot work. And it was very, very challenging for us to operate inside Russia in these circumstances, and we had to start new legal entities, new foundations. Over and over again, we open a new foundation, we operate several months, then they realize that this new entity belongs to us, and they do the same thing again and again and again and every time, when we were facing those problems, we had some bitcoin savings that we could actually use to continue our work, to continue working seamlessly, and that was a, really, really, a lifesaver for us. But in 2021, our foundation was labeled as an extremist organization on the territory of Russia, so we became completely illegal. It was dangerous for us to keep operating inside the country, and we had to relocate the entire organization from Russia to Lithuania, Europe, where we live and work now. And we thought that our financial struggles were over, since we are not under banking surveillance anymore, but we were so mistaken, because Putin decided to invade Ukraine, and after the invasion, Russia is facing financial sanctions, and the entire country is being completely cut off from the global financial system, and we don't have access to our Russian supporters anymore. We cannot receive donations from Russians anymore because it's physically not possible, and also, it's extremely dangerous, because we're called an extremist organization, and for donating to us, they will face eight years of imprisonment. So, our Russian donors now prefer to use Bitcoin in order to support us, and we collect Bitcoin donations when working in Europe. And we were thinking what we were going to do with all these Bitcoin donations, because it's very hard to operate in Europe with Bitcoin as a nonprofit organization because of the banking regulations. But very quickly, we realized that there are so many payments that we need to make where traditional currencies don't work. We still support political prisoners, their family members, we provide financial support to cover their lawyers. We even paid for Alexei Navalny’s funerals with Bitcoin. All of those payments we do with Bitcoin because we don't have any other way to operate financially. So now living and working in exile, I would say we rely on Bitcoin even more than before, and some of our some of the members of our foundation, prefer to receive salary in Bitcoin for different reasons. So, there are so many use cases of Bitcoin, and it's not only about Russia, I think we'll talk more about actors from all over the world. Since I have a lot of experience as a big nonprofit operating with Bitcoin now, I also educate activists how to incorporate this technology into their work.

Emily Mellen 10:18

Thank you. You've just given a whole series of compelling reasons why Bitcoin can be used in activist movements. But, Ian, this use of Bitcoin could be seen as kind of counter intuitive to the narrative on cryptocurrency that we often encounter in the media, right? Do you see any intersections between the anti corruption Foundation's use of Bitcoin and your observations about Bitcoin’s use over time, or cryptocurrencies use over time?

Ian Appel 10:42

Yeah. So, getting back to sort of the key idea of what a cryptocurrency is, and I mentioned before, the fact is, it's decentralized. It's not controlled by a single entity, meaning that a government can't stop a Bitcoin transaction unless it controls the ledger, which is very difficult, if not practically speaking, impossible, to do. And so, this means that, well, you can essentially use Bitcoin or other cryptocurrencies to avoid doing what the government wants you to do. And so oftentimes the media narrative here is that you can use Bitcoin to break the law. And so that could mean, going sort of way back to bitcoins origins, one of the first major use cases of Bitcoin was on a website called Silk Road, which could be used to buy illegal goods. Now, there's also the plus side here, in that in some countries, there's repressive regimes that, as Anna just discussed, use banking as a tool to essentially deplatform their opposition. And sso,Bitcoin has this sort of dual use case, which is it's not controlled by anyone. In some respects, that can be good and some it can be bad. And I think that's not different than any sort of new technology. And there are other instances where people use Bitcoin to get around various types of government rules and regulations. And so, a really well-known example of this is in China, which has export controls. They're essentially trying to keep money inside of the country. And in 2021 essentially banned cryptocurrencies to try to meet this goal. And what we've seen since then is that, well, at least anecdotally, oftentimes people are using cryptocurrencies to try to get around capital controls in China as well as other countries. And again, this stems from the fact that the Chinese government doesn't really control what happens on that blockchain.

Emily Mellen 12:46

So, with that in mind, thinking specifically about activist movements, what do you both see as the potential benefits of using cryptocurrency and also the drawbacks?

Anna Chekhovich 12:57

So, since I mentioned that I educate activists now on Bitcoin technology, I after having this experience with the Russian opposition movement a year ago, I decided to join the Human Rights Foundation, where I also work now, as a nonprofit Bitcoin adoption lead. So, I provide Bitcoin 101 webinar for activist and nonprofit organizations, and I see a huge demand for this knowledge, for this education, because now more than 72% of the population of the planet is living under authoritarian regimes. And it boosts Bitcoin adoption everywhere in the world, because those activists, those freedom fighters, they need access to money, and they're all in the same situation where they're whether it's deprived of access to traditional currencies or it's dangerous for them to use it, and they benefit from this technology in different ways. First of all, they can continue their work. They can continue fighting for democracy and they can stay safe. They can do their financial transactions without being surveilled by their governments. But besides activists coming to my webinars or my workshops, I see growing demand from big charities, big organizations, those who provide financial aid to activists who work on the ground. For example, I provided a workshop for the National Endowment for Democracy at their office in Washington, DC. Or recently, we had a call with the Amnesty International and some other big organizations also want to learn how to provide Bitcoin grants, support in Bitcoin to activists who operate in countries under surveillance, because there is no other way to support them, no other way to help them with their work, because receiving that grant, let's say Human Rights Foundation wants to support someone, let's say in Afghanistan or Belarus, and if they receive that bank wire that says grant from the Human Rights Foundation, in the best case scenario, that transaction will be just frozen. In the worst case scenario, the recipient of funds will be arrested for collaborating with an American entity, or something even worse than that. So, many organizations started to realize the significance of financial freedom tools when they want to support some freedom fighters, safely, anonymously, or even in the cases when those activists, they simply don't have a bank account. It also happens in some countries. And Bitcoin transaction is borderless. It's very cheap, and if you know how to use this tool properly, no one, no one can see the who was the sender, who was the recipient. So, there are so many opportunities that Bitcoin provides to those freedom fighters and the demand for this technology is growing. And I started this program, Bitcoin education last year in 2024 and the first class, I had like 10 or 15 students, and I finished the year with a group of more than 100 students. So, yeah, it's, it's growing very, very fast. And this is, this is actually great. It's, it's just a one of the tools, like VPN, there is a lot of prejudice about Bitcoin. When I try to reach out to some people who never used it before, who never thought about it before, and I mentioned Bitcoin, there's a lot of prejudice, like people think first of all that it's a scam, or it's something about making money, trading, but when I explain that it's actually borderless money that cannot be stopped by oppressive regimes, it's like an eye opening moment for many. They realize that it's just one of the tools that they can use and that can be very, very helpful in their work.

Emily Mellen 17:01

So, looking towards the future, Ian, what do you see as the evolution of cryptocurrency to come, and how might this affect activist movements?

Ian Appel 17:12

Well, I think an interesting question is, and it comes back to, what is a drawback potentially of using Bitcoin in this context, and something that most people are probably familiar with is bitcoin is really volatile, and the price can move around a lot. Historically, we oftentimes see both massive gains in the value of Bitcoin as well as massive drawdowns. And so, this is something that that makes the use of Bitcoin somewhat less attractive. If you know you have a certain balance in your treasury today and tomorrow, it might drop by, who knows, 2030, 40% and so, sort of when we look at the evolution of cryptocurrencies, and like I said before, Bitcoin is sort of the first, the oldest and the largest. What we've seen also emerge is the idea of a stable coin. And so, a stable coin is a crypto currency that tries to maintain a peg to another currency, usually the US dollar. And so, what stable coins are trying to do is to offer those benefits of Bitcoin, like Anna said, in terms of being this borderless currency, without the price volatility, without needing to ultimately speculate on price. And so, there's a lot of attractive elements here that potentially could make stable coins an attractive alternative to using Bitcoin.

Emily Mellen 18:43

Anna, do you have any suggestions, thinking about that, or general suggestions for organizers who may want to follow the path of using Bitcoin for their activism?

Anna Chekhovich 18:53

Yeah, I think it's very hard to predict the future of Bitcoin, but I definitely think that it evolves, and it will get better. It's a very new technology. And if we see how fast it's getting adopted, it's amazing. It's getting adopted faster than the internet was adopted. And what we see now at the Human Rights Foundation, there is a lot of collaboration between us, not only with activists, but also with developers who work in the field of Bitcoin, and developers who create tools for people like me, for activists, tools that are more safe to use that are more private, and we see that those developers really want to contribute to the fight for the better world, for democracy, and with this huge support of those amazing, brilliant minds, I am sure that those technologies will only evolve, and we will highly benefit from it.

And in the beginning of this conversation, we mentioned that some criminals may use these technologies as well. And usually I say to this that criminals use also traditional currencies, they use all other technologies, but for people like me, we only have access to this technology. We only have access to Bitcoin. We don't have access to other currencies, other tools. So, there is a huge demand for it, and that is going to be evolving. Of course, there are some drawbacks, some downsides of it. Since some governments try to control it, they try to overregulate it. And we have to not only fight against dictatorships, but we also have to do advocacy for those tools. We meet Western authorities who try to regulate Bitcoin and explain to them that these tools are crucial in our work, and if you also deprive us to access to cryptocurrency, in this case, we will not have any opportunity to keep doing what we're doing, and to keep fighting. So, it's a lot of work, and I'm sure, I'm very optimistic, and I'm sure that it's gonna evolve, and I hope that, I hope that we will manage to to defeat those, those regimes, and I'm happy that we have tools to do it.

Emily Mellen 21:36

Thank you and thank you both for being here today.

Anna Chekhovich 21:39

Thank you so much.

Ian Appel 21:40

Thank you very much.