Binance, the worlds largest crypto exchange, has yet again gained some limelight after company documents show hidden links to The People’s Republic of China. The firm is currently facing a lawsuit against the US agency CFTC(Commodity Futures Trading Commission). The agency has accused Binance of operating illegally in the US and such allegations do not paint a good picture to the US Federal Government and its agencies. The regulatory agency has accused Changpeng Zhao, Binance’s CEO and other company executives of directing their employees to hide the firm’s Chinese operations. These operations include an office in China that has been in operation until the beginning of the year 2020. Owing to the ongoing litigation, the company documents have revealed ties to China that according to the litigant, were deeply hidden.
Binance was originally based in China up until the year 2017 when the crypto crackdown conducted by Chinese authorities forced it to leave and set a new base in the US. Since then the platform has been struggling to cut its ties to China secretly owing to the fact that the US Government has a rivalry with The Peoples Republic Of China. This rivalry has gone on for a while now with the US accusing China of using technology and social media to spy on the US Government operations. The US has since then embarked on a censorship campaign against technology developed in China and this includes social media app, TikTok. In the past month, TikTok’s CEO was summed by the House Intelligence Committee of the US government to explain how the application management protects its user’s in the US against Chinese Intelligence owing to the platform’s massive ties to China. The US has also in recent years gone against top executives of Chinese technology firms among them Huawei and its next-generation 5G technology. The US has also gone further to ban TikTok on government devices.
The recent allegations will therefore, add fuel to Binance’s woos even as CFTC accuses the company of deliberately withholding locations of their top executive’s offices. The Internal documents indicate that the firm misleadingly asserted that its headquarters were pegged on the current location of their CEO as part of a strategy to avoid regulation from US agencies. According to the documents, a small number of customer service agents were concealed including their base and scope of operation. The agency also alleges that in 2019, a Binance employee sent a message to caution others to only publicly acknowledge offices in Malta, Singapore and Uganda but refrain from mentioning any other locations that include China. Allegedly, Binance informed its employees that their salaries would be disbursed through a bank in Shanghai. The firm, in 2019,asked its staff to attend a tax session in an office located in China.
As evidence continues to mount against Binance, the firm has vehemently denied any current ties to China while alleging that the agency is basing its argument in old documents. Binance has since sent its report to the US senators inquiry team which it has published on its platform to iterate its commitment to transparency and compliance to regulating authorities. In the letter, the firm has informed the senators that the articles and media reports cited in the report from the senate are either incorrect or incomplete. While maintaining its compliance to standard practices in the industry, Binance has expressed its seriousness through its public crypto ledger that tracks transactions and flow of crypto assets for transparency purposes. In the letter, Binance has explained its background in detail and revealed its commitment to compliance through its compliance program, sanctions compliance, law enforcement cooperation and collaboration and its commitment to security and transparency. Having said that, only time and circumstances can vindicate Binance’s argument as it navigates the murky waters of the current US crypto crackdown.
