Jamie McNeill
A series of internal documents from Binance have demonstrated that the exchange may have stronger ties to China than was previously thought.
The Wall Street Journal has exposed the various ways in which Binance has a focus on Asia and the significance of the Asian markets for customers of Binance.
The most concerning revelation appears to be that Binance US wasn’t entirely separate from Binance, and the US department was only set up in order to explicitly skirt around regulations that ought to have otherwise applied to the parent company.
Binance planned to “neutralise” US authorities
Given that Binance has approximately one-fifth of their customers located in the US, it is highly important for them that they remain compliant with the US authorities.
Internal memos demonstrate that many Binance executives were particularly concerned about the possibility of the US potentially playing a significant role in shutting down offshore exchanges – which would have been a disaster for Binance’s business operations.
One company executive told colleagues any lawsuit from the US would be like “nuclear fall out”, according to the Wall Street Journal.
Binance’s attempt to “neutralize” US authorities through lobbying efforts will be a great cause for concern for US regulators, who are already under fire after the FTX fiasco.
Binance .US is seemingly an elaborate facade for Binance to skirt around domestic regulators, not a wholly separate entity.
If the two firms are one in the same, U.S. consumers aren't insulated from the risk associated with Binance.
Not-so-shocking revelations from the WSJ. pic.twitter.com/gwW5IU9GG1
— Joe Consorti ⚡ (@JoeConsorti) March 6, 2023
What ties to Binance have with China?
The Binance CEO Changing Zhao often laments the US media’s attempts to try and link him with China, and claims that his ethnicity is entirely irrelevant – particularly because for the last 30 years he has been a Canadian citizen and spent the majority of his life there.
Nevertheless, the internal memos from Binance that have been leaked paint a rather different picture, and the revelations could pose a lot of issues for Binance moving forward if they are not able to effectively demonstrate that the various Binance companies are distinct enough from one another.
CZ has reiterated several times, however, that Binance is not a Chinese company, and that no company that was Chinese would be able to make this claim and get away with it.
Moreover, Binance doesn’t depend on China for a great deal of business, since the country has a far stricter regulatory framework towards crypto than the West.
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This article was written for Business 2 Community by Jamie McNeill.
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