Whilst claiming that it welcomes regulatory oversight, major crypto exchange Binance was acting against those same regulators, Reuters reported today.
Reuters says it conducted “dozens” of interviews with former senior employees of the exchange, as well as advisers and business partners, and that it reviewed numerous documents, including internal company messages and confidential correspondence between Binance and national regulators.
Citing their own investigation, Reuters claims that the crypto exchange was:
- withholding information from regulators, at least eight of whom have warned consumers about the risks of using the exchange;
- acting against its own compliance department’s recommendations;
- and maintaining weak anti-money laundering (AML) checks on its large customer base, despite concerns raised by senior company figures.
Therefore, the report claims that,
“Binance has operated outside rules that govern traditional financial firms and many crypto rivals. An opaque corporate structure has enabled Binance to offer products that many national regulators don’t allow locally registered firms to sell. Binance has repeatedly declined to specify in which jurisdiction its main online exchange is based, complicating regulators’ efforts to oversee its activities. And it has minimized costly client background checks.”
Running away from the tightening regulation in China in 2017, the exchange apparently decided in 2018 to set up base in Malta, stating that it planned to seek a license to operate its exchange from the island. However, CEO Changpeng Zhao “grew nervous about [Malta’s] stringent anti-money laundering protocols and the level of financial disclosure required,” Reuters said, citing “four people with direct knowledge of the licensing discussions” – scrapping the plan in 2019, as well as the promised donations to the country’s cancer patients.
Reuters said that the company replied to their request for comment but didn’t comment in response to detailed questions.
Cryptonews.com reached out to Binance for comment.
As reported, in late December, Binance received in-principle approval from the Central Bank of Bahrain (CBB) to establish itself as a cryptoasset service provider in the Kingdom of Bahrain. At the same time, Turkey’s Financial Crimes Investigation Board (MASAK) fined Binance Turkey nearly USD 750,000 at the time after the crypto exchange failed the financial watchdog’s audit for monitoring AML compliance.
Earlier in December, the company decided to shut its Singapore exchange. The move came just months after Binance ran into trouble with the Monetary Authority of Singapore (MAS), as well as other regulators in the region.
In August, the firm appointed Greg Monahan, a former United States Treasury Criminal Investigator as its Global Money Laundering Reporting Officer.
Meanwhile, per a different Reuters report, two men suspected by Germany of assisting an Islamist gunman who killed four people in Vienna, Austria in 2020, used Binance to buy or sell unspecified amount of crypto. Reuters cited a confidential letter by Germany’s Federal Criminal Police Office seeking information from the company.