Binance’s regulatory and legal issues in the U. S, EU and China - Protocol — The people, power and politics of tech
Here's everything going wrong at Binance, the world's biggest crypto exchange. Binance trades far more crypto than rivals like Coinbase and FTX. Its regulatory challenges and legal issues in the U.S., EU and China loom just as large. Binance CEO Changpeng Zhao is overseeing a global crypto empire with global problems. Binance, the largest global crypto exchange, has been hit by a raft of regulatory challenges worldwide that only seem to increase. It's the biggest example of what worries regulators in crypto: unfettered investor access to a range of digital tokens finance officials have never heard of, without the traditional investor protections of regulated markets. Binance is the largest global exchange, doing $27 billion in spot exchange volume over 24 hours as of Tuesday, on a down day in the market, making it much larger than rivals such as Coinbase. Binance has grown due to its focus on being the place for crypto enthusiasts to trade almost any digital asset, investors say. While many exchanges operating in the U.S. such as Coinbase take time and have a process for adding coins for trading, Binance has aggressively added new cryptocurrencies and more recently NFTs. That long tail is appealing to investors looking to speculate on the hot new crypto thing. Originally founded in China, Binance reportedly pulled its employees and any official presence out of the Chinese market in 2017 after China banned ICOs. But Binance has launched quickly around the world in many countries. Regulators in many of those countries have said Binance is operating without permission. Where it's under fire. The U.S. Regulators at the Commodity Futures Trading Commission are looking at whether Binance engaged in insider trading or market manipulation by "trading on customer orders before executing them", according to Bloomberg. Binance denied any misconduct. The Justice Department and the IRS are also reportedly examining Binance's role in money laundering and tax evasion. The U.K. The Financial Conduct Authority said Binance's U.K. affiliate was operating without approval. Japan. Japan's financial agency warned the company for operating without permission. The EU. Binance in July said it would suspend deposits from the European Union's Single Euro Payments Area network. Germany. Binance earlier this year launched stock tokens, a sort of synthetic instrument that gives commission-free exposure to traditional stocks such as Apple and Tesla. The tokens were being offered through CM-Equity AG, an established company that would hold the underlying stocks. Thailand. Thailand's financial agency in July filed a criminal complaint against Binance, accusing it of operating a digital asset exchange without a license. South Korea. South Korean regulators did not publicly come after Binance, but they did warn crypto exchanges to register. Binance shut down Korean language support and Korean-currency trading pairs in August. Malaysia's financial regulator took an enforcement action against Binance and ordered it to stop operating in the country. In August, Binance shut down access in the country. China. Though Binance has largely moved itself out of Beijing's reach, China's continued tightening of crypto trading rules inevitably affects customers in the country who might try to use the exchange. The mystery of Binance's headquarters. The global troubles raise a question: Where is Binance? The company has long said it doesn't have a headquarters, preferring to be a decentralized company, a structure inspired by the headless nature of cryptocurrencies.