Another week, and yet another report embarrassing Binance. A research from the Wall Street Journal (WSJ) makes no bones about it and states that Binance has very deliberately developed a strategy that puts it under the radar of regulators such as the US Securities and Exchange Commission (SEC) can stay.
Again bad news for Binance
Binance was founded in 2017 and quickly grew into the largest crypto exchange in the world. In 2019, there was an expansion to the American market. At the time, however, US authorities went after no-registration exchanges, of which Binance was also a part.
According to the WSJ report, the exchange was terrified of any lawsuits in the United States. For that reason, the company had devised a sophisticated strategy to defuse an attack by the US authorities. The WSJ states this on the basis of obtained emails, documents and even interviews with former employees of Binance.
According to the WSJ, this was also the reason Binance.US was set up. Today, this is still the US branch of Binance, which claims to be completely independent from Binance.
However, according to the WSJ, this does not appear to be entirely true. Binance.US was only set up to maintain the appearance that the American branch of Binance indeed had nothing to do with the parent company in its business operations, but in practice, according to the WSJ, this was certainly not the case.
Binance.US and Binance
The report states that Binance.US and Binance were inextricably linked. Not only were employees shuffled around without mercy and the finances can be traced back to the same entities, even the software on which the trading platform runs is almost exactly the same.
Binance said in a response to the WSJ that things are different today. However, it is admitted that Binance may not have acted properly here and there:
“We recognize that we did not have adequate compliance and controls in place in those early years. We are now a completely different company when it comes to compliance.”
Of course, this is only a research report from a newspaper, but in case the findings are also underlined by US authorities, this could mean bad news for Binance.