New allegations arise regarding Binance's regulatory framework

The report alleges Binance attempted to evade regulatory review – a suggestion the exchange denies.

On October 17, a new report published by Reuters alleged that cryptocurrency exchange Binance “deviated from scrutiny” by regulators in the UK and US. The main spearhead of the allegations stems from two alleged incidents in its operating history.

First, Reuters reported on Binance Chief Strategy Officer Zoe Wei's proposal to backdate a service agreement relating to various operations between Binance's UK unit and the Cayman Islands holding company of Binance on March 11, 2020. The move would have allowed Binance to exempt itself from registration with the country's Financial Conduct Authority for one year, as any company operating before January 10, 2020, could do before entry. new regulations come into force.

Second, Reuters reported that Harry Zhou, a Binance-affiliated entrepreneur, submitted a proposal in November 2018 that would allegedly direct law enforcement attention to a US entity instead of Binance itself. Reuters alleged that the proposal arose because "despite the banning of US users [due to financial crime laws], Binance knew that traders continued to use the main platform".

A few hours later, Changpeng “CZ” Zhao, CEO of Binance, issued a rebuttal to the Reuters report. In the article, CZ specifically addressed the allegations regarding its US entity:

"This is the story of the so-called "Tai-Chi [defensive action] PowerPoint", which was submitted by an outside consultant as a suggestion on how to start a business in the United States. to clarify once again for the record: it was never implemented. I personally rejected it.

Regarding its regulatory framework, CZ explained that Binance's market capitalization has "multiplied exponentially" in a short period of time and that "there is no manual on how to immediately switch from a small start-up to a Fortune 100 Organization. He added, “But we are learning fast,” indicating that Binance is the first major exchange for...