Texts and documents from Binance executives show plan to avoid US scrutiny – WSJ

[ad_1]

March 5 (Reuters) – Binance, one of the world’s largest cryptocurrency exchanges, has hatched a plan to avoid the threat of lawsuits from U.S. authorities when it created a U.S. entity in 2019, reports the Wall Street Journal on Sunday.

Any legal action by U.S. regulators, who had signaled an impending crackdown on unregulated offshore crypto players, would be like a “nuclear fallout” for the business of Binance and its executives, the WSJ said, citing a warning from a Binance executive to his colleagues in a private conversation in 2019.

The report is based on messages and documents from 2018 to 2020 reviewed by The Wall Street Journal as well as interviews with former employees.

Binance, founded in 2017, and Binance.US are more closely tied than the companies have revealed, mixing personnel and finances, and sharing an affiliated entity that has bought and sold cryptocurrencies, according to the report.

He noted that Binance.com mainly operated from hubs in China and Japan, but a fifth of its customers were based in the United States. Binance.US is based in San Francisco.

Latest updates

See 2 more stories

Binance developers in China maintained software code that supported Binance.US users’ digital wallets, potentially giving Binance access to US customer data, the WSJ reported.

Since 2020, the Department of Justice and the Securities and Exchange Commission have been investigating Binance’s relationship with Binance.US, the report says, citing subpoenas and people familiar with the matter. If US regulators determine that Binance controls its US entity, they could claim the power to control all of Binance’s activities.

In a statement emailed to Reuters, a Binance spokesperson said, “We have already acknowledged that we did not have adequate compliance and controls in place in those early years…we we’re a very different company today when it comes to compliance.”

Binance.US, the SEC and the DOJ did not immediately respond to requests for comment from Reuters.

Binance is under scrutiny as three US senators this week asked the cryptocurrency giant and Binance.US for information about their regulatory compliance and finances.

Reuters reported that Binance.US was created as a de facto subsidiary in 2019 to distract US regulators from Binance.com.

Reporting by Akriti Sharma in Bengaluru; Editing by Richard Chang and Diane Craft

Our standards: The Thomson Reuters Trust Principles.

[ad_2]