New documents have emerged showing that executives from Binance, one of the world’s largest cryptocurrency exchanges, had been planning to evade US regulatory scrutiny. The documents, which were obtained by Forbes, include messages from Binance’s leadership team discussing ways to circumvent US laws and regulations.
The messages reportedly show Binance’s founder and CEO, Changpeng Zhao, discussing how to set up a “Taiwan-based entity” that could serve as a front for the exchange’s operations. The plan involved using this entity to funnel profits from Binance’s US business back to the parent company, in order to avoid triggering US regulators’ attention.
Other executives also reportedly discussed the need to create a “US-compliant” version of Binance that would be able to operate legally in the US. However, the documents suggest that the company was struggling to find a way to achieve this without exposing its core business to US regulators.
Binance has been under increasing scrutiny from US regulators in recent years, with the exchange being accused of operating without the necessary licenses and failing to comply with US anti-money laundering and know-your-customer regulations. In 2020, the Commodity Futures Trading Commission (CFTC) launched an investigation into whether Binance had allowed US customers to trade on its platform without registering with the agency.
The documents obtained by Forbes suggest that Binance’s leadership team was aware of these concerns and was actively seeking ways to avoid US regulatory scrutiny. This could potentially have serious implications for the exchange, which has already faced regulatory action in several other countries, including the UK, Japan, and Thailand.
In response to the publication of the documents, Binance issued a statement saying that the company “does not comment on specific matters or inquiries.” However, the exchange did confirm that it had “taken proactive measures to prevent access to our platform from US IP addresses.” Binance also claimed that it had “significantly expanded” its compliance team and had made “a number of significant hires” in recent months.
The publication of these documents is likely to add to the growing regulatory pressure on Binance and other cryptocurrency exchanges. US regulators have been increasing their focus on the crypto industry in recent years, with the SEC and CFTC both taking action against a number of high-profile companies.
The rise of cryptocurrencies has created a new financial ecosystem that operates outside of traditional regulatory frameworks, and regulators are struggling to keep up. This has led to a patchwork of regulations around the world, with some countries taking a more permissive approach to cryptocurrencies, while others have moved to ban them outright.
For Binance, the challenge will be to find a way to operate legally in the US without compromising its core business model. The documents obtained by Forbes suggest that the company has been struggling to find a solution to this problem, and it remains to be seen whether it will be able to do so in the future.
