Binance (pixabay photo)
Binance, for those who have lived in recent years without a computer, or haven’t read a single crypto article on Ace until today, is the largest crypto exchange in the world – and by a huge margin, especially after its main competitor, FTX, went bankrupt last November. It tries with all its might to prove that it is not just an opportunistic company like many crypto ventures, but a responsible financial company that behaves like a bank for everything, so you can trust it with your eyes closed.
But according to the correspondence of the company’s employees obtained by the Wall Street Journal, she is not telling the whole truth – not even half of it.
Binance was established in China in 2017, and quickly became one of the largest crypto exchanges in the world, overtaking much older ones, such as the American Coinbase. Many of her clients – close to 20% of the account holders – came from the US, and she was aware of the fact that the country’s regulators do not like China and even more so do not like crypto. Therefore, its senior officials offered different ways to escape the arms of the American authorities.
More in-
In 2019, a separate company called BAM was established, which operates an exchange called Binance USA (Binance.US) – but according to the Journal, the person who founded it was Chengpeng Zhao, the founder and CEO of Binance Global. More than that – he allegedly even controlled it through straw corporations registered in the Cayman Islands and the Virgin Islands.
Not only did Zhao control Binance USA, but the two companies shared employees, funds and cross-ownership of crypto-trading subsidiaries. At the same time, Binance Global encouraged American customers not to use Binance USA, where some of Binance’s options were unavailable due to The regulatory danger posed, except in global Binance, by means of VPN software that falsifies the user’s location and encrypts his communications.
Recently, these connections are becoming clearer, in light of a series of revelations, lawsuits and investigations in the US. Thus, for example, Texas sued Binance for failing to provide information about its controlling shareholders, Joe, and therefore did not receive a license to operate in the state at all; the Department of Justice and the Securities and Exchange Commission The Securities and Exchange Commission (SEC) has both been investigating the ties between the two authorities since at least 2020; and last Thursday, senators from both parties demanded answers from the company about the boundaries between the two entities.
Last month, the exchange’s VP of strategy, Patrick Hillman, admitted that it is aware of the investigations and believes that it will have to compromise with the government – that is, pay a fine, but after that it will be able to operate in the most important market in the world with official approval.
A Binance spokeswoman said that “we admit that we did not properly comply with the rules of compliance and control”, but added and emphasized that this was “during these early years. Today we are a quite different company when it comes to compliance”.
A spokeswoman for Binance USA said that “Binance USA was founded specifically to offer customers in the USA products and services that comply with American rules and restrictions.”
Both spokeswomen declined to comment on various details revealed by the Journal, such as the fact that Binance Global had access to all information of Binance USA customers until at least mid-2021, and that two of Zhao’s external investment firms were deeply involved in Binance USA.
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