According to a recent report by the Wall Street Journal, Binance, the world’s largest cryptocurrency exchange, allegedly failed to disclose its control over Binance.US, an independent unit established to comply with US financial regulations.
The report states that Binance programmers in Shanghai had control over the software code that supported Binance.US users’ digital wallets, potentially giving them access to US customer data. While Binance denies mixing user data, the revelation could damage the company’s position with US regulators.
The WSJ report also claims that Binance did not disclose its partnership with BAM Trading, a company it worked with to establish Binance.US, and that Binance chief Changpeng Zhao essentially controlled the company when registering the US entity in 2019. As a result, the SEC is investigating the relationship between Binance.US and two trading firms affiliated with Changpeng Zhao.
Moreover, the WSJ report suggests that Binance officials discussed ways to keep US investors despite stating that it would no longer accept US customers upon the launch of the US entity. This reportedly included encouraging the use of VPNs.
In response to the report, a Binance spokesperson told Forkast via Telegram that the company had acknowledged its initial missteps in compliance and controls during the early years, which have since been rectified.
However, the allegations made in the WSJ report could have significant consequences for Binance’s regulatory compliance and standing with US authorities.
As the investigation continues, it remains to be seen how this will impact Binance’s operations in the US and beyond. The company has already faced regulatory challenges in various countries, and this latest revelation could exacerbate the situation.
It is important for Binance to ensure full compliance with regulatory requirements and maintain transparency in its operations to avoid further scrutiny.