Cryptocurrency giant Binance has reportedly spent years hiding its connections to China.
An investigation by the Financial Times published Wednesday (March 29) said this move contradicts claims by the company that it had left China after the government began cracking down on the cryptocurrency industry in 2017.
The report, citing internal company documents, said Binance CEO Changpeng Zhao and other executives repeatedly told workers to hide the company’s presence in China, which included an office in China that was in use until late 2019 and a bank used to pay some workers’ wages.
“We no longer publish our office addresses … people in China can directly say that our office is not in China,” Zhao said in 2017 in a company messaging group, FT reported.
The report cited another message that arose out of an exchange by employees in 2019, following a news report that said Binance was opening a Beijing office: “Reminder: publicly, we have offices in Malta, Singapore and Uganda. Please do not confirm any offices anywhere else, including China.”
Reached for comment by PYMNTS, Binance rejected the claims in the FT report, saying the sources quoted in the story were “dramatically mischaracterizing” events.
“Binance does not operate in China nor do we have any technology, including servers or data, based in China,” a company spokesperson said. “We strongly reject assertions to the contrary. To be clear, the Chinese government, like any other government, has no access to Binance data except where we are responding to lawful and legitimate law enforcement requests.”
FT argued that the documents show the lengths Binance has gone to in order to mask the scope and location of its business amid increased regulatory scrutiny.
An example of that scrutiny was on display earlier this week when the Commodity Futures Trading Commission (CFTC) charged Binance and Zhao with violations of the Commodity Exchange Act (CEA) and CFTC regulations.
Among the charges in the CFTC complaint is that Binance “purposefully obscures the identities and locations of the entities operating the trading platform.”
In a statement to PYMNTS Monday (March 27), Binance said it has been working with the CFTC for two years and that it finds the commission’s actions “unexpected and disappointing.”
“Nevertheless, we intend to continue to collaborate with regulators in the U.S. and around the world,” the statement said. “The best path forward is to protect our users and to collaborate with regulators to develop a clear, thoughtful regulatory regime.”
The CFTC filing was one of several challenges facing the world’s largest crypto exchange in recent days. Binance also announced it would sunset its offer of charging no fees on spot bitcoin trading and was hit with a software error that forced it to temporarily pause spot trading. Amid all this, the company reportedly saw outflows of $2.1 billion.
The report about Binance’s alleged ties to China marks the second time this month the company has been accused of attempting to mislead regulators.
A March 5 report by The Wall Street Journal cited internal company documents and interviews with former employees that suggested Binance had created its American platform Binance.US as a shield against governmental scrutiny.
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