- Binance is under a lot of scrutiny for its ties to Binance.US.
- A new investigation has shown Binance was in charge of some of the bank accounts in the U.S.
- This could be a hammer blow to the exchange’s efforts to avoid U.S. prosecution.
The association between Binance and its proclaimed independent branch, Binance.US, has been murky, with several U.S. regulatory bodies eager to bring both to justice.
In an exclusive report, Reuters has uncovered how a senior Binance executive was in charge of five bank accounts belonging to the global crypto exchange’s purportedly independent U.S. affiliate.
Tight Controls or Independent Operations?
According to records from those years, Reuters uncovered info from the now-defunct U.S. bank Slivergate, which showed that Guangying Chen, a close associate of CEO Changpeng Zhao, was authorized to operate the accounts in 2019 and 2020.
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It is stated that employees at Binance.US had to ask Chen’s team to process payments, even to cover the firm’s payroll, company messages show.
These new findings fuel the rumors that Binance exercised tight control over Binance.US, despite both being adamant that they have always operated independently.
Binance’s head of legal, Krishna Juvvadi, told Reuters in April that employees of Binance.US’s operator, BAM Trading, had “exclusive control” since its founding in 2019.
Binance Heading for a “Nuclear Fallout?”
Leaks in March from a report in The Wall Street Journal suggested that Binance.US was built as a subsidiary to shield Binance from US regulators. If it were shown that Binance and Binance.US were more interconnected than stated, the SEC would have plenty of ammunition to crack down on the world’s biggest crypto exchange.
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In the leaked message, Binance executives warned of “nuclear fallout” if US regulators looked into the exchange on these allegations.
Binance has been working to distance itself from U.S. regulators, who, at the same time, have been trying to pin allegations on the Teflon exchange.
Most recently, Commodity Futures Trading Commission (CFTC) brought a lawsuit against Binance, its CEO, and related entities. The lawsuit alleges that Binance has been operating illegally in the U.S. by offering unregistered derivatives contracts to U.S. investors.
The CFTC charged Binance and Zhao with willful evasion of commodities laws by “intentionally structuring entities” to avoid U.S. regulations designed to protect investors.
It is also claimed Binance executives also suggested US investors use VPNs to bypass its restrictions – something that was uncovered in the Wall Street Journal report.
The SEC has also previously alleged that Binance.US may be running an unregistered securities exchange.
On the Flipside
- Binance CEO, and the founder of Binance.US, Zhao, has been looking at ways to reduce his majority stake in the U.S.-based business.
Why This Matters
The fallout from this report could have massive implications for the world’s biggest crypto exchange and the global crypto ecosystem. Currently, there is a war being waged in the U.S. to bring crypto companies under strict control through enforcement. These allegations could provide enough fuel to swing the fight in favor of regulators.
Read more about the Binance leaks:
Binance Leaks Spell Trouble with SEC, ‘Nuclear Fallout’.
Read more about Binance leaving Canada being good for Kraken:
Kraken Scoops Up Canada Users and Deposits After Binance, OKX Leave.
