Binance, one of the biggest cryptocurrency exchanges in the world, devised a strategy to avoid the possibility of prosecution by US authorities as it established an American corporation in 2019.
According to a 2019 private communication between a Binance executive and colleagues, any lawsuit from US regulators—who had hinted at a forthcoming crackdown on unregulated offshore crypto players—would be like “nuclear fall out” for Binance’s firm and its officials.
The study is based on communication and paperwork from 2018 to 2020.
The 2017-founded Binance and Binance.US are more linked than the firms have publicly acknowledged, mingling staff and finances and sharing an affiliated entity that traded cryptocurrency, according to the study.
Although a fifth of Binance.com’s consumers were headquartered in the United States, it was observed that the company mostly functioned from hubs in China and Japan. San Francisco is the home of Binance.US.
The software code that powered Binance was kept up to date by Binance developers in China. Digital wallets used by American customers may have given Binance access to US consumer data.
The investigation into Binance’s connection to Binance.US has been going on since 2020 according to the Department of Justice and Securities and Exchange Commission the newspaper claimed, citing subpoenas and persons with knowledge of the situation. Regulators in the United States could assert control over Binance’s whole operation if they find that Binance has control over its U.S. subsidiary.
A representative for Binance told Reuters via email that they have already recognized that during those early years, they did not have proper compliance and procedures in place…they are a totally different firm today when it comes to compliance.
Three U.S. senators this week requested information from the massive cryptocurrency exchange and Binance.US regarding their regulatory compliance and financials, putting Binance under more scrutiny.
According to Reuters, Binance.US was established as a de facto subsidiary in 2019 to shield Binance.com from US regulators’ attention.
