After the disclosure, there are questions about the exchange’s compliance with regulations.
The Financial Times has reported the possible existence of a Binance-China link. The FT cited that he was in possession of some internal documents belonging to Binance. The FT noted that these documents contradict previous claims by several Binance executives, including Changpeng Zhao.
In one such claim, CZ hit back at critics who accused Binance of being state-sponsored. CZ noted that Binance had taken its operations offline in China since 2017. Zhao also noted that only a small number of Binance customer service agents remained in China until 2018.
However, internal documents cited by the Financial Times reveal that Binance continued to operate outside of China until at least 2019.
What the documents revealed about the Binance-China link
Internal documents also revealed that Binance’s top executives instructed Binance employees to hide the company’s presence in China. A message in 2017 advises its users not to post any of their office addresses anywhere. Another document revealed that employees on the payroll in China were asked to attend a tax session at an office located in China.
In his response, an anonymous Binance employee pointed out that the picture being painted was not accurate. “Unfortunately, anonymous sources cite ancient history (in cryptographic terms) and characterize events dramatically wrong,” Binance said. CZ believes the suspicion stems from the fact that he is Chinese and also employs Chinese.
Furthermore, Binance assured its clients that the Chinese government does not have access to their data except through legitimate requests.
Is Binance hiding something?
The CFTC’s lawsuit follows a request by Binance.US to acquire assets of the defunct Voyager Digital for a proposed $1 billion purchase. The US Committee on Foreign Investment is reviewing the proposal to determine whether the investments will compromise national security.
After the disclosure, there are questions about the exchange’s compliance with regulations. While the exchange was incorporated in 2017 in the Cayman Islands, it does not have a designated headquarters.
The Commodity Futures Trading Commission (CFTC) has filed a motion against Binance for failing to disclose its headquarters. The CFTC noted that Binance was staying in the “regulatory gray” by failing to register a location.
Once again, the lawsuit accused Binance of illegally serving US clients. Furthermore, the regulator alleged that Binance had suggested using VPNs for these clients to hide their locations. Following these announcements, a net outflow of $900 million was removed from the exchange as clients fear what will come next.
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A seasoned writer with practical experience in the fintech industry. When he is not writing, he spends his time reading, researching, or teaching.
