The world of cryptocurrency has been shaken again by the latest report from the Wall Street Journal. According to the source, Binance – the largest player in the industry – has developed a strategy to avoid the risk of facing prosecution by the US authorities.
In a bold move, the company set up a US entity in 2019, as a way to mitigate the possible legal consequences in the United States.
It seems that the exchange has been operating on thin ice, and the threat of being pursued by US regulators has been looming over them for some time.
At The Wall Street Journal reports shows that the actions of crypto exchanges can be seen as a sign of desperation, a last-ditch effort to avoid the long arm of the law.
It is not difficult to imagine the sense of urgency that must drive company executives when they seek to create a US entity, hoping that it will be enough to protect them from legal consequences.
Image: Cryptopolitan
Sorry for Compliance Issues
The article also states that Binance, founded in 2017, and Binance.US, a subsidiary of the former, are more closely related to the company. The two refer to their employees, funds, and affiliated entities that trade cryptocurrencies.
It was pointed out that the majority of the company’s consumers are in China and Japan, but one in five is in the United States. Binance.US operates in San Francisco.
Text, Binance executive documents show plans to avoid US scrutiny – WSJ https://t.co/UrZmLF7q4d pic.twitter.com/VmUQYBHcLb
— Reuters (@Reuters) March 5, 2023
In addition, the source code of the US-based digital wallet is maintained by Binance developers in China. As a result, Binance, as a global company, has access to information about customers in the United States.
Furthermore, company representatives Reuters email say:
“We’ve recognized that we didn’t have enough compliance and controls in those early years … we’re a very different company today when it comes to compliance.”
Binance: ‘Nuclear Fallout’
According to the Journal, Binance executives warned their colleagues in a private conversation in 2019 that a lawsuit from the US regulator, who had envisioned a campaign to be carried out on unregulated offshore crypto companies, would be like a “nuclear fallout” for the company and its leaders.
Binance, a former competitor to now-defunct crypto giant FTX, was ordered by a group of senators from both political parties last week to provide specific details about its business operations in the face of allegations of illegal practices.
The senators detailed the Justice Department’s accusations against the crypto exchange in the letter and claimed that the exchange was not transparent.
Crypto total market cap at $987 billion on the daily chart | Chart: TradingView.com
Concerned that the exchange violated anti-money laundering laws and US sanctions, the DOJ disclosed criminal investigation against Binance and CEO Changpeng Zhao in 2018.
The DOJ has not yet determined whether it will file charges against specific businesses or executives.
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