Reuters Investigative Report: Binance withholding information from regulators, repeatedly evading its own compliance department

Reuters Investigative Report: Binance withholding information from regulators, repeatedly evading its own compliance department


In a report published on January 22, global news agency Reuters has laid out the findings of its investigative reporting detailing the regulatory compliance practices of Binance, the biggest cryptocurrency exchange in the world by trading volume.


The authors have suggested the existence of a recurring pattern wherein the firm’s CEO Changpeng Zhao has apparently, while proclaiming its openness to government oversight, ran an organization that has systematically denied regulators’ requests of any financial and corporate structural information; and also shirked off proper client background checks.


The Reuters investigative findings are based on several accounts of Binance’s former senior employees as well as advisers, in addition to the review of documents including internal correspondence and confidential messages that were exchanged between several national regulators and the firm. 


According to these documents, many high-ranking employees have repeatedly been raising concerns of a weak Know Your Customer/Anti-Money Laundering (KYC/AML) standard at Binance, all of which were subsequently ignored by the CEO.


Additionally, the crypto exchange has also been reported to have acted against the recommendations of its own compliance department while continuing to onboard new customers from seven countries that were initially designated to be of extreme money-laundering risk.


The key takeaway from the Reuters report authors is the similar pattern of non-compliance behaviour that has allowed Binance of maintaining ambiguous jurisdictional affiliation combined with opaque corporate structure while simultaneously offering financial products that would have usually required regulatory approval or licensing in several countries of its operation.


As a response to Reuters’ inquiry report, a company spokesperson has said that the report’s findings had been based on outdated or outright incorrect information.


CEO Changpeng Zhao also later commented via Twitter, saying that a lot of fear, uncertainty and doubt had been hovering around as journalists had been talking to people who were dropped from Binance for not working out well, in an attempt to “smear” the firm. Zhao stated the firm is strictly focused on “anti-money laundering” and “transparent” and that it “welcomes regulation.” 


Despite ongoing investigations into suspicious activity on the Binance platform in several jurisdictions, the crypto exchange firm is continuing its expansion into new markets, the most recent being a potential deployment in Thailand.

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