New scandal in sight in the cryptosphere? Already closely watched in the United States since the FTX scandal, Binance is at the heart of an investigation by the wall street journal which should not cause regulators across the Atlantic to relax their grip. The world’s leading cryptocurrency exchange platform has reportedly developed a plan to neutralize possible lawsuits, according to messages and documents seen by the business daily, as well as interviews with former employees.
Because if Binance has experienced a spectacular takeoff since its creation in 2017, the company understood that it could have problems if a stricter regulatory framework was put in place in the United States, which is one fifth of its clientele. As early as 2019, a leader sounded the alarm by saying that any legal action launched by American regulators would lead to a “nuclear fallout”according to a private conversation reported by the wall street journal.
An American entity at the center of the scheme
To protect itself in the land of Uncle Sam, Binance has built a basic platform, dubbed Binance.US, so that it licenses Binance’s technology and brand, while pretending to be independent from Binance .com. Thus, the latter would be protected from US regulators, local users being further listed on Binance.US and not Binance.com.
The ties between Binance and its US entity were much stronger than the two companies would have you believe, as they mixed staff and finances, and even shared an affiliated entity that bought and sold cryptocurrency. , according to wall street journal. In addition, Binance developers in China have continued to take care of the software code responsible for Binance.US digital wallets, allowing de facto access from the Asian country.
(Too?) strong links between the American branch and Binance
Therefore, US regulators could claim that all of Binance’s activities fall under their supervision. If so, it would put Changpeng Zhao (CZ), the iconic boss of Binance, in an awkward position with scrutiny from US authorities that could threaten the platform and its leaders.
THE wall street journal assures that the North American stock market policeman, the SEC (Securities and Exchange Commission), and the Department of Justice have been looking into the relationship between Binance and Binance.US (based in San Francisco) at least since 2020.
Without much competition since the collapse of FTX, Binance faces more and more threatening clouds, especially in France where several investors accuse the platform of having launched its services and promoted them when it was not yet authorized to do so. .