Binance texts reveal plan to elude US authorities

Binance is under heightened scrutiny as three US senators asked the giant crypto currency exchange and Binance.US for information about their regulatory compliance and finances

Binance, one of the world’s biggest crypto currency exchanges, developed a plan to avoid the threat of prosecution by US authorities as it set up an American entity in 2019, as per a Wall Street Journal report on Sunday.

Any lawsuit from US regulators, who had hinted a coming clampdown on unregulated offshore crypto companies, would be like “nuclear fallout” for Binance’s business and its officers, the Wall Street Journal said, citing a Binance executive’s warning to colleagues in a private chat during 2019.

The report is based on messages and documents between 2018 and 2020 reviewed by The Wall Street Journal as well as interviews with former employees.

Binance, founded in 2017, and Binance.US are more intertwined than the firms have revealed, mixing staff and finances, and sharing an affiliated entity that bought and sold crypto currencies, the report said.

The news outlet noted that Binance.com operated primarily from hubs in China and Japan, yet a fifth of its customers were based in the US. Binance.US is based in San Francisco.

Binance developers in China maintained the software code that supported Binance.US users’ digital wallets, possibly giving Binance access to US customer data, the Wall Street Journal reported.

Since 2020, the Department of Justice (DoJ) and Securities and Exchange Commission (SEC) have been looking into Binance’s relationship to Binance.US, according to the report, citing subpoenas and people familiar with the matter. If US regulators establish that Binance has control over its US entity, they could claim the power to investigate the entire business of Binance.

In a statement to Reuters, a Binance spokesperson said: We have already acknowledged that we did not have sufficient compliance and controls in place during those early years. We are a very different firm today when it comes to compliance.

Binance is under increased investigation as three US senators this week asked the crypto currency exchange and Binance.US for details about their regulatory compliance and finances.