Binance to Improve Relationship with US Regulators
- Binance has had different brushes with US regulators over the past few years.
- A new report claims that Binance.US transferred $400 million to an account operated by Binance CEO Changpeng Zhao.
With US regulators intensifying their bid to regulate the crypto industry, crypto exchange Binance expects to eventually resolve ongoing inquiries into its operations. Binance Chief Strategy Officer Patrick Hillmann claims that most of the software engineers who contributed to the growth of the exchange were not familiar with the laws and regulations governing key areas such as money laundering, bribery, and corruption.
In an interview with the Wall Street Journal, Hillmann claimed that this lack of awareness created breaches in Binance’s compliance efforts, which the company is now attempting to close by engaging with regulators to determine “the remediations we have to go through.” However, the Binance official noted that the exchange is “highly confident and feeling really good about where those discussions are going.”
Binance is arguably the largest crypto exchange by market cap. But the exchange has struggled to see eye-to-eye with US regulators. Authorities claim Binance is yet to register its presence and services with the appropriate agencies
The Commodity Futures Trading Commission (CFTC) launched an investigation in March 2021 to determine whether the exchange had improperly permitted U.S. citizens to use its services. Following the bankruptcy of its rival FTX, Binance faced increased scrutiny from US regulators.
Binance Moves Funds to a Firm Managed by the CEO
A Reuters story today citing documents states that Binance US transferred $400 million from its platform to a trading company run by Binance CEO Changpeng Zhao. According to the news source, the money was transferred from the Binance US account at Silvergate Bank to Merit Peak Ltd. during the first three months of 2021. Merit Peak Limited, run by Zhao, is a trading company that the US Securities and Exchange Commission is reportedly investigating.
According to messages seen by Reuters, Binance.US executives were concerned about the outflows because the transactions occurred without their approval or knowledge. While Binance has previously claimed that Binance.US is completely independent and functions as its “US partner,” the money transfers imply that the global Binance exchange, which lacks a license to do business in the US, was in charge of the finances of its US subsidiary.
There are ongoing inquiries into possible violations of financial regulations, including whether Binance is using the American exchange as a front for conducting business in the United States. If Binance is found to have a deeper connection with Binance.US than initially revealed, the exchange could get into deeper trouble with US regulators.
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