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Leaked Docs Reveal How Binance Dealt With US Regulations: Report
Crypto trading colossus Binance created a corporate plan for profiting from the U.S. market while avoiding regulatory scrutiny, Forbes reported Thursday, citing a 2018 document it obtained.
By Danny Nelson
Updated Sep 14, 2021, 10:25 a.m. Published Oct 29, 2020, 8:13 p.m.
Cryptocurrency trading colossus Binance Holdings Limited created a corporate plan for profiting from the U.S. market while avoiding the country's regulatory scrutiny, Forbes reported Thursday, citing a 2018 document it obtained.
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- The leaked presentation outlines a "Tai Chi entity" that would funnel revenue to Binance through a web of corporations without exposing its parent to the financial regulator's microscope, according to the Forbes article, which included a screenshot of a slide but not the entire deck.
- When asked for comment, a Binance spokesperson directed CoinDesk to tweets by exchange CEO Changpeng "CZ" Zhao. He called Forbes' reporting bunk and asserted that Binance follows all local laws, including those in the U.S. "Anyone can produce a 'strategy document,' but it does not mean Binance follows them," said Zhao, adding that the slide deck was produced by a third party, not his company.
- U.S. affiliate Binance.US operates under a corporate structure similar to the "Tai Chi" network, according to Forbes. Binance.US CEO Catherine Cooley has long refused to discuss Binance.US's ownership.
- Binance in June 2019 unveiled plans to launch a U.S. exchange registered with the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury Department. The exchange updated its terms of service the following day to bar U.S. users from accessing Binance's global hub.
- Forbes said the Tai Chi document calls for "strategic" virtual private network (VPN) usage to sidestep the Securities and Exchange Commission and New York State Department of Financial Services, and warns Binance employees against working in the U.S. to mitigate "enforcement risks." Forbes additionally claims the document contains a "detailed strategy for distracting" U.S. regulators.
- Binance used to be based in Malta, but its headquarters location has been something of a mystery for most of this year. Zhao has been cagey on the matter in public appearances.
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