- Binance has maintained operations in China despite claims to the contrary.
- A Financial Times report reveals the exchange’s alleged secret operations in China.
- The news comes amid heightened regulatory scrutiny of Binance and its CEO.
The world’s largest cryptocurrency exchange, Binance, has been hiding its ties to China for years despite the company’s claims to have left the Asian nation, according to a Financial Times (FT) report.
According to the report, which cited internal documents from the exchange, Binance and its executives have been lying when they claimed they withdrew from China in 2017, amid the government’s crackdown on cryptocurrencies. The powerhouse banned digital asset exchanges that year and then, in 2021, intensified its prohibitive policy on the sector.
Binance CEO Changpeng Zhao and other top executives have reportedly instructed company employees to hide their presence in the country, according to the report. The company also covered that it used a Chinese bank to pay the salaries of some employees and also had an office in the territory that was in use until the end of 2019, adds FT.
A spokesperson for the exchange that spoke out about the allegations issued a message to the newspaper saying that the company regrets that the report draws on “sources that go back to ancient history (in terms of the cryptocurrency market).” He further assured that the information “characterizes the facts dramatically incorrectly.”
“To be clear, the Chinese government, any other government, does not have access to Binance data, except when we respond to legal and legitimate law enforcement requests,” the spokesperson continued, as quoted by the FT.
The person added that while Binance has a China-based customer support call center to serve Mandarin speakers around the world, the exchange does not provide services or operations, nor does it have its servers in that country.
Binance under the magnifying glass
The internal documents cited by the FT highlight how Binance may have concealed the scope and whereabouts of its operations, and appear to be in line with accusations made recently by US regulators.
The report comes shortly after the US Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance that also raises questions about the exchange’s operations.
The CFTC lawsuit accuses Binance and its CEO of creating a system to deliberately hide its true scope and operations. Among the allegations, it also alleges that the companies and their executives have been making a concerted and deliberate effort to conceal the location of the company’s subsidiaries in order to circumvent regulations.
The legal document does not specifically mention China beyond stating that Binance was originally founded in that country. US regulators are seeking monetary sanctions, and trade and registration bans for the company.
The Financial Times is not the first to question the exchange ‘to China and its local government. Last year, during a congressional hearing on the FTX takedown, US Senator Bill Hagerty raised concerns about Binance‘s alleged connections to the Chinese Communist Party, as recalled by U.Today.
More recently, a report published this week by the CNBC news network pointed out that some Binance employees had allegedly been helping users residing in China to circumvent the KYC (Know Your Customer) verification processes, thus circumventing the restrictions of local crypto trades.
The current scrutiny surrounding the largest digital asset exchange has raised fears among many traders, who have rushed to withdraw their funds from the platform. Since the notice of the CFTC lawsuit, Binance has seen $2.2 billion worth of cryptocurrency leave its platform, according to data collected by The Block.
