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Secret Binance Plot: Leaked Texts Reveal Plans to Evade US Law Enforcement – What’s Going On?


Secret Binance Plot: Leaked Texts Reveal Plans to Evade US Law Enforcement – What’s Going On?

Source: AdobeStock / JorgeEduardo

Binance and Binance.US, the U.S. arm of the cryptocurrency exchange billed as a separate company, have been more closely tied than previously reported, mixing staff, technical teams and finance.

According to a report published Sunday by the Wall Street Journal (WSJ), a review of internal documents and employee messages shows that Binance and Binance.US, despite claims that they were completely separate companies, shared personnel, finances and had an affiliated entity that bought and sold cryptocurrencies.

The report further claimed that Binance created its US platform as a shield against regulators. The move reportedly came after US authorities signaled an impending crackdown on unregulated offshore crypto players while a fifth of Binance customers were in the US.

“Worried about the threat of lawsuits, Binance has devised a plan to neutralize US authorities,” the report said. “The strategy was centered around building a simple US platform, Binance.US, which would license Binance’s technology and brand, but which otherwise appears completely independent of”

The report also shared texts between employees of the two companies from 2019 that illustrate their close involvement. For example, in September 2019, when a Binance staff member in Shanghai enabled trading for the US platform minutes before its launch, it led to a discussion in a Binance chat group on the Telegram messaging app. :

Ninja0r [a Binance software developer]: “Why did trading start???? It’s not the time yet!!! Who started trading? We have set the trading timers? Who started trading?

More messages followed, including another urgent one from Ninj0r: “someone started TRADING EARLY. That he has done? At 8:56:09:822 someone started trading manually. WHO? For what?” Finally, Binance CEO Changpeng Zhao said: “a guy here in Shanghai, operation error.”

The posts indicate that the Shanghai developers initially maintained key Binance.US software functions. The Shanghai developers’ contracts were with Binance, not the US platform, the WSJ said, citing a person familiar with the deals.

The report also revealed that Binance staff approached Gary Gensler, then former chairman of the Commodity Futures Trading Commission and now chairman of the SEC, in 2018 to join the platform as an adviser. A Binance employee told colleagues at the time that Gensler was “likely back in a regulator seat if the Democrats win the 2020 election.”

Binance and Binance.US did not immediately respond to requests for comment.

Binance faces increasing surveillance in the US

Last week, Senators Elizabeth Warren (D-Mass.), Chris Van Hollen (D-Md.) and Roger Marshall (R-Kansas) asked Binance and its US partner Binance.US to provide detailed information on their business operations amid accusations. illegal practices.

In a letter to CZ and Binance.US CEO Brian Shroder, the senators said the exchange and its related entities had “deliberately” evaded regulators, facilitated the transfer of assets to criminals and sanctions evaders, and withheld basic financial information from its customers. and the public.

It should be noted that Binance has been under investigation by the US Department of Justice (DOJ) since 2018. The investigation is said to focus on money laundering conspiracy, unlicensed money transmission and violations criminal penalties.

Separately, US regulators have cracked down on the Binance-linked BUSD stablecoin. Last month, the New York Department of Financial Services (DFS) ordered Paxos, a crypto company that issues the Binance USD (BUSD) stablecoin, to stop minting BUSD tokens.

Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.