Binance In Hot Water As Documents, Texts On Alleged Plan To Evade Regulations Comes To Light

The world of cryptocurrency has been shaken once again by the latest report from the Wall Street Journal. According to their sources, Binance – the biggest player in the industry – has been developing a strategy to evade the risk of facing prosecution by U.S. authorities.

In a daring move, the company established a U.S. entity back in 2019, as a means of mitigating the potential legal consequences of operating in the United States.

It seems that the exchange has been operating on thin ice, and the threat of being pursued by U.S. regulators has been looming over them for quite some time.

The Wall Street Journal’s report implies that the crypto exchange’s actions could be seen as a sign of desperation, a last-ditch attempt to avoid the long arm of the law.

It’s not hard to imagine the sense of urgency that must have been driving the company’s executives as they scrambled to set up a U.S. entity, hoping against hope that it would be enough to shield them from legal repercussions.

Image: Cryptopolitan

Excuse Over Compliance Issues

The article also claims that Binance, founded in 2017, and Binance.US, a subsidiary of the former, are more linked than the firms have let on. The two share employees, funds, and an affiliated entity that traded cryptocurrencies.

It was pointed out that although the majority of the company’s consumers were located in China and Japan, one in five were located in the United States. Binance.US operates in San Francisco.

Moreover, the US-based digital wallets’ source code was maintained by Binance developers in China. As a result, Binance, as a global company, had access to information about its customers in the United States.

Subsequently, a company representative emailed Reuters to say:

“We have already acknowledged that we did not have adequate compliance and controls in place during those early years…we are a very different company today when it comes to compliance.”

Binance: ‘Nuclear Fallout’

According to the Journal, a Binance executive warned colleagues in a 2019 private chat that a lawsuit from US regulators, who had foreshadowed an impending campaign on unregulated offshore crypto firms, would be like “nuclear fallout” for the company and its leaders.

Binance, a former competitor to the now defunct crypto behemoth FTX, was ordered by a group of senators from both political parties last week to provide specific details on its business operations in the face of claims of illegal practices.

The senators detailed the Department of Justice’s accusations against the crypto exchange in their letter and claimed the exchange lacked openness.

Crypto total market cap at $987 billion on the daily chart | Chart:

Concerned that the exchange violated U.S. anti-money laundering and sanctions laws, the DOJ opened a criminal investigation against Binance and CEO Changpeng Zhao in 2018.

The DOJ has not yet determined whether to file charges against the business or specific executives.

-Featured image from Castellex