Cryptocurrency leader Binance facing scrutiny from U.S. lawmakers

Published on:

  • Pressure has grown on cryptocurrency trading giant Binance over international breaches
  • Binance has been a force to reckon with in the crypto world, especially after the collapse of FTX
  • Binance Coin, the exchange’s digital token, has dropped nearly 7%  as a result of the mounting bad press.

Binance took over as the undisputed leader of the cryptocurrency industry when FTX collapsed in November, one of its main competitors.

Binance CEO slammed FTX’s founder Sam Bankman-Fried for poor business practices that shook investor confidence in the industry and depressed asset values. The company has also rescued other businesses, including the defunct broker Voyager Digital.

However, American authorities have been looking more closely at Binance lately. And now, in light of a recent report, they might look into fresh proof that the exchange’s U.S. and international branches were more interconnected than previously thought. Binance Coin, the exchange’s digital token, has dropped nearly 7% over the past week as a result of the mounting bad press.

The two divisions of Binance were designed to be independent of one another, enabling the company, which claims to have no physical headquarters, to hide its sizable international operation from American oversight. The Wall Street Journal claims that might not have been the case.

Read: Zambia test cryptocurrency regulation using blockchain technology

Binance breaches

Binance “did not have adequate compliance and controls in place during those early years,” a spokeswoman for Binance admitted to The Journal, but it now functions differently.

In addition to creating the Binance.US entity specifically for American customers, Binance explored a number of other options to reduce its exposure to U.S. oversight. According to an internal presentation, Binance should launch “major P.R. efforts” to demonstrate its readiness to work with American regulators.

According to The Journal, in 2019 executives asked Gary Gensler, a former C.F.T.C. head who is currently a professor at M.I.T. and taught a class on cryptocurrencies, to advise the business. (Binance executives thought Mr. Gensler would return to being a regulator if a Democrat took the White House in 2020.) Gensler refused, and he later became the SEC’s chairman.

Agencies investigating Binance

Currently, a number of U.S. authorities are carefully scrutinizing Binance, including that agency. In addition to a lengthy investigation into the connection between Binance and Binance.US, the S.E.C. is attempting to prevent Binance from acquiring Voyager Digital. (Changpeng Zhao, the founder of Binance, hinted on Friday for a short moment that the business might consider backing out of the agreement before quickly reassuring everyone of its commitment.)

A bipartisan group of American legislators, meanwhile, requested more information from Binance last week, citing possible proof “that the exchange is a hotbed of illicit financial activity that has facilitated over $10 billion in payments to criminals and sanctions evaders.”

According to a Binance spokesman, the business is “confident in the strength” of its internal compliance procedures and is still dedicated to having a dialogue with lawmakers and regulators.

Officials from Binance had been concerned that the company was at danger from such scrutiny: In a message to coworkers in 2019, one executive warned that a legal action brought by a U.S. regulator would have “nuclear repercussions.”



Leave a Reply

Please enter your comment!
Please enter your name here

Nathan Sialah
Nathan Sialah
Nathan Sialah is a seasoned journalist with a diverse background in digital journalism, radio broadcasting, and cryptocurrency trading. With over five years of experience in the field, Nathan has honed his skills in delivering accurate and engaging news content to a wide audience. In addition to his journalistic expertise, Nathan is a dedicated researcher in the Artificial Intelligence industry, keeping abreast of the latest advancements and trends. His multifaceted background allows him to bring a unique perspective to his reporting, covering a wide range of topics with depth and insight.