Binance is one of the world’s largest cryptocurrency exchanges, with a user base of over 100 million people globally. However, in recent months, the company has been embroiled in regulatory trouble, facing lawsuits and investigations from various regulatory bodies around the world. A recent report has shed light on the exchange’s deep and extensive ties to China, even years after it officially left the country.
Binance Established Secret Links With China
Binance concealed significant ties to China for an extended period, in contrast to executives’ statements that the cryptocurrency exchange departed the country following a crackdown on the industry in late 2017.
CEO Changpeng Zhao and other high-ranking officials directed Binance staff to hide the company’s Chinese operations, which included an office that remained in use until at least the conclusion of 2019 and a Chinese bank that was utilized to compensate some employees.
In a company messaging group in November 2017, Zhao said:
“We no longer publish our office addresses…people in China can directly say that our office is not in China.”
The internal documents highlight how Binance, currently the largest cryptocurrency exchange worldwide, has concealed the scope and whereabouts of its operations amidst increased regulatory scrutiny of crypto-related activities.
Binance CEO, Zhao, has claimed that, with the exception of “a small number of customer service agents,” most of the exchange’s employees departed China after the government’s 2017 crackdown on cryptocurrencies.
Binance was sued by US regulators on Monday for allegedly providing illegal services to American clients. The Commodity Futures Trading Commission accused Binance of “deliberately” withholding information on the location of its executive offices and misleadingly asserting that its headquarters was based on Zhao’s whereabouts as part of a strategy to evade regulation.
Binance FUD Continues To Rise
At the end of 2019, Binance employees were in talks about a media report indicating that the company was setting up an office in Beijing. In response, one message cautioned, “Reminder: publicly, we have offices in Malta, Singapore, and Uganda. Please refrain from acknowledging any offices in any other location, including China.”
Binance officially said:
“It is unfortunate that anonymous sources are citing ancient history (in crypto terms) and dramatically mischaracterizing events. This is not an accurate picture of Binance’s operations.”
Despite public scrutiny, Zhao has repeatedly denied that Binance has any association with China, as seen in a blog post from last year where he stated that only “a small number of customer service agents” were still present in China as of late 2018. It is noteworthy that Zhao was born in China but has Canadian citizenship, having relocated to Canada as a child.
Binance stated that the original founding team members situated in Shanghai left China only two months after the company was established, before the incorporation of the company, due to crackdowns in the crypto industry. The exchange also emphasized that it had never been registered or incorporated in China.
According to internal company documents, China remained a crucial component of Binance’s operations even after the country’s strict regulations on cryptocurrency in 2017. In 2018, employees were informed that their salaries would be disbursed via a bank located in Shanghai. Similarly, in 2019, Binance asked employees on the Chinese payroll to attend a tax session in an office situated in China.
One of Binance’s employee onboarding documents reportedly instructed new hires operating in China to install VPNs on their devices. Furthermore, the recent CFTC lawsuit against Binance alleged that the exchange instructed its US clients to use VPNs in order to hide their geographical location.