Binance Employees Allegedly Helping Users Bypass China’s Crypto Ban – Here’s What You Need To Know

CNBC’s recent investigation dropped a bombshell, Binance employees may be actively helping Chinese users evade the country’s rigid crypto regulations.

The investigation examined translated messages from Discord servers and Telegram groups linked to Binance, the world’s largest cryptocurrency exchange by volume and assets.

While Binance claims not to operate in China after the 2021 trade ban, official Chinese chatroom posts reveal that Chinese customers are cleverly circumventing Binance’s Know Your Customer (KYC) controls, hiding their true country from residence.

The ingenious techniques range from forging bank documents and fabricating fake addresses to exploiting loopholes in Binance’s system, often shared by Binance employees themselves.

Surprisingly, Binance employees and volunteer “angels” reportedly provided video guides and documents, advised users to fake their country of residence to secure a Binance debit card, and turned their crypto assets into a traditional checking account.

National Security KYC/AML Bypass Risks

These findings raise serious concerns about Binance’s KYC and anti-money laundering (AML) efforts.

Sultan Meghji, a Duke University professor and former FDIC chief innovation officer, spoke to CNBC about his apprehensions.

“If I had an eight out of 10 concern about Binance from a regulatory perspective and a national security perspective, that brings it to 10 out of 10,” Meghji said as the academic highlighted potential national security risks, hinting at the malicious actors such as terrorists, criminals and money launderers could exploit these techniques.

In contrast, the founder of Binance Changpeng ‘CZ’ Zhao hailed the exchange’s KYC systems as a “billion dollar effort” with advanced VPN detection tools.

A Binance spokesperson claimed that employees are “explicitly prohibited from suggesting or assisting users to circumvent their local regulatory laws and policies,” with violations resulting in immediate termination or audit.

How are users subverting Binance?

Binance has banned Chinese mobile phone registrations and blocked Chinese IP addresses since 2021.

Still, the investigation found recommendations for using the VPN to mask user locations and breach China’s home firewall.

Users were advised to register as Taiwanese residents and then revert to Chinese nationality, avoiding VPN nodes in the United States, Singapore and Hong Kong to avoid possible domestic project restrictions.

Another baffling find is a mirror platform hosted by Chinese giant Tencent, apparently making it easier to onboard Chinese customers using domestic phone numbers, though Binance denies acknowledgment.

Other tips include registering email hosts in crypto-friendly countries, setting up foreign companies for KYC purposes, and acquiring Palau digital IDs to use with mail forwarding addresses. remotely in Austria, combined with bank statements made via PDF editors.

The investigation also revealed Telegram’s advertised services for falsifying financial documents as proof of address. These revelations raise questions about the source of the funds, as financial institutions could perceive funds coming from Binance as suspicious.

With growing concerns about Binance’s regulatory compliance and national security, investors and regulators need to be extra vigilant to protect the integrity of the crypto ecosystem.

This news comes as Coinbase faces a lawsuit from the SEC despite years of requests for regulatory clarification and SEC involvement in best practice compliance.