The report alleges that Binance tried to insulate itself from regulatory scrutiny, which the exchange denies.
On Monday, a new report published by Reuters claimed that cryptocurrency exchange Binance had "evaded" scrutiny from UK and US regulators. A large increase in claims stems from two alleged incidents in its operating history.
First, Reuters reported on a proposal by Binance strategist Zoe Wei dating back to March 11, 2020, a service agreement covering various transactions between Binance's UK entity and Binance's Cayman Islands holding company, wrote. I was able to do it before the waiver went into effect.
The move purportedly allowed Binance to exempt itself from registration with the country's Financial Conduct Authority for one year, as any company operating before January 10, 2020 could do so before the new regulations came into effect.
Second, Reuters reported that Harry Zhou, a businessman associated with Binance, submitted a proposal in November 2018 to draw the app's attention to the US company instead of Binance. Reuters reported that "despite US users being banned [under the Financial Crimes Act], Binance was aware that US traders were still using its main platform," so it was stated that the proposal had been carried out.
Hours later, Binance CEO Changpeng Zhao (CZ) posted a rebuttal to the Reuters report. In the article, CZ specifically addressed the allegations surrounding his US entity:
"This is the story of the so-called "Tai-Chi [defensive action] PowerPoint," which was put forward by an outside consultant as a suggestion on how to set up a business in the United States. Let me state clearly once again for the record: I never know put it into practice. I personally rejected it.
Regarding the regulatory framework, CZ explained that Binance's market capitalization has "increased exponentially" in a short period of time and that "there is no manual that explains how to go from a small startup to a Fortune 100 organization in an instant." ". “But we are learning fast,” he said, noting that Binance is the first major exchange outside the US for KYC users. However, the crypto executive did not comment on Reuters' allegations about his actions in the UK.