Binance allegedly filed inadequate financial report in UK – FT

Directors at Dimplx have alleged that Binance’s 2020 annual report for its UK subsidiary was inaccurate as it did not accurately report the nature of the exchange’s business, revenue, assets, and liabilities, the Financial Times reported on Oct. 12.

According to the report, the inaccuracies were reported for a payment processing facilitator, Binance Digital, registered in the UK in 2019. Dimplx owns 20% of this company, while Changpeng Zhao is the majority shareholder.

The issue

Binance filing reportedly claimed that the Binance Digital account held about £100 million in cash and bank balances by the end of 2020. The filing also stated that the same amount was owed to creditors.

Dimplx directors alleged that the £100 million was balances held for Binance Digital customers that visited the website Binance.com. Therefore, a transaction fee will apply to the funds.

The firm continued that the exchange’s 2020 financial statement falsely claimed “zero turnover or fees in relation to any transactions conducted with any customer during the financial year.”

Financial Times reported that Binance Digital did not pay any tax in the said year.

Binance, Dimplx relationship soured

Binance’s relationship with Dimplx has soured. The two firms started a UK joint venture in 2019, with Dimplx’s director Simon Dingle serving on Binance Digital’s board until December 2020.

Dimplx has revealed intent to sue the exchange over their business dealings. The firm did not reveal its claims.

A spokesperson for the exchange reportedly said:

“In light of threats of litigation from the minority shareholders, Binance is not able to respond fully to the allegations. However, we understand that the minority shareholders are disappointed that the joint venture did not bear fruit.”

Binance faces UK regulatory scrutiny

UK’s Financial Conduct Authority had warned residents about using BInance because it failed to provide basic information about its operations. The regulator also barred the exchange from carrying out any activities within the UK without its written consent.

However, the stringent regulatory oversight has also been extended to another leading exchange FTX, which the regulator stated operates without authorization in the country.