This year, it has been a rough ride for Binance, constantly making headlines with lawsuits, withdrawals of services and senior executives resigning from the company. Is this a coincidence or is there something happening behind the scenes?
In the latest development, Binance is no longer providing its cryptocurrency Visa debit card in Europe, and the companies it partnered with are also pulling out. It is no surprise that companies are distancing themselves from the cryptocurrency giant amid ongoing lawsuits.
While the company’s Co-founder and CEO, Changpeng Zhao (CZ), advocates the importance of being transparent, has he genuinely been forthright about his actions? Or is he striving to evoke sympathy, giving the impression of innocence and transparency, all the while concealing something undisclosed?
Here’s a brief breakdown of what happened to Binance across the world.
2013 - 2017: In 2013, the nation directed third-party payment providers to cease employing bitcoin. Chinese officials halted token sales in 2017 and vowed to persist in their scrutiny of crypto exchanges in 2019.
24 September 2021: 10 government authorities, including the People's Bank of China, released a notice stating that cryptocurrency is not recognised as legal tender. All cryptocurrency transactions within China are deemed unlawful, including offshore exchanges offering services to Chinese residents.
13 Feb 2022: Binance pulled out of Singapore and shutted down its operations in the financial hub.
13 May 2023: Binance announced exit from Canada
30 May 2023: Binance Markets Limited requested to cancel its FCA permissions, which were officially terminated on 30 May 2023, as recorded in the FCA Register.
13 June 2023:Belgium's markets regulator ordered Binance to halt offering crypto services.
14 June 2023: Binance de-registered from Cyprus to focus on larger EU markets due to regulatory pressure.
16 June 2023:Binance announced its departure from the Dutch market and made changes to its services in the Netherlands.
26 June 2023: Binance withdrew licence application in Austria
27 September 2023: Binance announced exit from Russia and sold its Russia business to CommEX
18 Oct 2023:Executive director of Binance France resigned, marking the tenth senior executive departure from Binance this year.
Binance's General Counsel, Chief Strategy Officer, and Senior Vice President for Compliance have resigned amid legal troubles for the company and its CEO. In addition, Binance dismissed numerous employees, with some not providing reasons for their departure, while others were informed of their redundancy. The exchange had plans to reduce its U.S.-based workforce.
Binance lost $790 million in 24 hours as investors moved assets after SEC lawsuit on 5 June 2023.
Despite Binance pulling out of multiple countries and dealing with legal challenges, it appears the company remains largely unaffected. What could be the reason for this?
Based on the data, it appears that withdrawals of businesses and services may not significantly affect Binance, as the company's biggest market is in China. (Image Source: The Wall Street Journal)
Binance was expected to distance itself from China after the country banned cryptocurrency trading in 2021. However, almost two years later, cryptocurrency-related assets worth $90 billion were traded in China within a single month, as seen on the data above. This makes China the dominant market for Binance, accounting for 20% of global trading volume (excluding large traders). Internally, the significance of China for Binance is acknowledged, and despite the ban, the exchange's investigations team collaborates with Chinese law enforcement to identify potential criminal activities among its 900,000+ active users in the country.
China expanded its crackdown on crypto in 2021, declaring all crypto-related transactions illegal. Despite this, the Chinese crypto market continues to thrive. Binance has sought innovative ways to serve Chinese users, including residency programs and VPNs for trading on banned exchanges.
Binance's undisclosed operations in China shed light on how the crypto giant manages to function in unwelcome territories. The exchange assisted Chinese users in bypassing restrictions by guiding them to visit websites with Chinese domain names before redirecting them to the global platform. This strategy was detailed in an internal document, circulated before China's 2021 crypto ban. Despite China's central bank imposing the ban, it remains silent on the matter.
Within Binance's official Chinese chatrooms, Binance employees and Binance-trained volunteers, known as Binance Angels, were seen sharing techniques with users to circumvent Binance's KYC and verification systems. These methods include forging bank documents and providing false addresses.
According to CNBC who have reviewed all the messages in Binance's Discord channel and Telegram groups from 2021 to 2023, Binance Angels frequently assist Chinese users with the registration process.
In May 2022, on Binance's Discord channel, a user inquired about how Chinese users could register. A Binance staff member responded (with user roles such as "angel" and "community volunteer", as shown in the image below) that they could use a VPN to bypass restrictions and register with an overseas email as a "Taiwan resident" before switching their nationality back to Chinese.
Screenshot of the user’s inquiry on Binance’s Discord channel. (Source: Web3+)
Another screenshot of the user’s inquiry on Binance’s Discord channel. (Source: ABMedia)
In December 2022, Stella, identified as the Binance community manager, shared instructions on how to download an app tailored for mainland Chinese users. This app allowed users to access Binance services without needing a VPN.
CNBC received the app link from an email with a binance.com domain. A reporter successfully downloaded the app in China without a VPN, using a Chinese phone number for registration. The app is hosted on Tencent and enables cryptocurrency trading in Chinese yuan, integrating popular Chinese apps like WeChat and Alipay. It also provides options for Chinese KYC verification.
The technicalities shared with customers also raise concerns about the effectiveness of Binance's anti-money laundering efforts. For international companies like Binance, Know Your Customer (KYC) and anti-money laundering (AML) efforts are crucial in ensuring that customers are not involved in illegal activities such as terrorism or fraud.
Duke University professor and former FDIC Chief Innovation Officer, Sultan Meghji, worries about Binance's leniency in enforcing KYC guidelines beyond China. He emphasised the national security implications, expressing concerns about how individuals like terrorists, criminals, money launderers, and cyber operatives from North Korea, Russian oligarchs, and more, could exploit these tactics to gain access to such infrastructure.
As experts predicted, which evidently happened in recent news, Israeli authorities have reportedly confiscated around 200 Binance accounts, which they believe have links to terrorist organisations since 2021. Notably, several of these accounts were connected to Palestinian firms associated with Hamas, according to Reuters. Binance has also proactively frozen all accounts tied to Hamas, and this action was to identify and confiscate accounts soliciting donations for the terrorist group.
Reports suggest that Binance, under the leadership of CZ and other senior executives, instructed its staff to keep their operations in China discreet. This includes maintaining Chinese offices until late 2019, recruiting in Shanghai, and conducting transactions with a Chinese bank for payroll purposes.
Furthermore, Binance reportedly advised new Chinese employees to install VPNs on their devices to hide their locations.
However, the evidence provided by the Financial Times mostly pertains to pre-2020 events, and the media outlet acknowledges uncertainty about Binance's current status in China, citing a former employee who claims many key developers are still in the country.
Binance adamantly denies any ties to China, emphasising that the company does not operate there and possesses no technical assets, including servers or data, in China.
In summary, despite legal challenges and withdrawals from multiple countries, Binance remains a leading cryptocurrency exchange. As CZ advocates transparency, it undeniably triggers suspicions about how the exchange evaded Chinese authorities for so long. It raises questions about potential connections with government authorities. Also, what else has he been hiding?
While we hope Binance is safe for users' funds, it is important to be vigilant and do your own research to avoid heavy losses like those experienced by FTX users.
The FTX bankruptcy estate claims SBF’s $1.76 billion repurchase deal with Binance in July 2021 was a fraudulent transfer due to FTX’s insolvency. The lawsuit seeks to recover billions for FTX creditors, alleging the transaction was fraudulent.
KikyoFormer Binance CEO, CZ (real name Changpeng), told Bloomberg that he had received multiple offers from buyers who are willing to offer him a high price to buy his shares in Binance.
XingChiBinance and its former CEO, Changpeng Zhao, are pushing to dismiss the SEC’s amended complaint, arguing that the regulator’s approach to crypto lacks clarity and consistency. Binance claims the SEC's broad interpretation of crypto assets as securities is confusing and unfairly applied.
WeatherlyChangpeng Zhao, founder of Binance, made his first public appearance since his prison release at the Binance Blockchain Week in Dubai, discussing his reflections on his incarceration and future plans. He expressed a renewed appreciation for personal connections, a commitment to education, and intentions to invest in emerging sectors while remaining optimistic about the future of cryptocurrency.
JoyFormer Binance CEO CZ's first tweet after his prison release sparked attention, briefly mentioning future plans and enjoying freedom. BNB surged to a monthly high but quickly reversed, declining along with the broader crypto market.
KikyoBinance founder CZ will be released today, 27 September, two days ahead of schedule, due to his release date falling on a weekend. Will this trigger a rise in BNB’s price?
KikyoBinance is expanding its compliance team by 1,000 employees to address rising regulatory demands, aiming to manage increased costs and scrutiny from U.S. authorities. The company has also prevented $2.4 billion in potential fraud losses this year, highlighting its commitment to enhancing security and regulatory alignment.
AnaisToncoin (TON) surged 12% on Thursday following Binance's announcement of its listing on 8 August at 6PM SGT, with withdrawals available 24 hours later. Will TON breakthrough its upper resistance or test its lower support?
KikyoThe 28th quarterly burn by the BNB Foundation eliminated $971 million worth of tokens, reinforcing the ecosystem’s commitment to reducing total supply and potentially increasing value.
SanyaThe SEC's attempt to classify BNB secondary sales as securities fails, though investigations into Binance’s activities continue.
ZeZhengElon Musk is preparing to replace its block function with something that has a more limited feature.
XingChiLitigation and rebuttal often lag in correcting mistakes, and the best way to change negative impressions is to grow positive value. In the field of crypto assets, this is true for Bitcoin, and so must Binance.
JinseFinanceBinance delists trading pairs like COMBO/BNB and NEO/ETH from January 26 due to poor liquidity. Market response shows positive performance. The move is part of Binance's ongoing review initiatives, including the recent addition of tokens to its Monitoring Tag list.
Xu LinIndia has heightened its crackdown on offshore crypto exchanges, leading Apple to remove apps of platforms like Binance and Bitfinex from its App Store within the country. Regulatory measures, including compliance notices and a 1% levy called Tax Deducted at Source (TDS), reflect India's commitment to enforcing crypto regulations, impacting both local and offshore exchanges.
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decryptBlock explorer BscScan shows roughly $16,000 flowed into the promoted coin.
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CointelegraphIs the serial reaction over?
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