- Binance set out on a plan to neutralize U.S. authorities, according to messages and documents from 2018 to 2020 reviewed by The Wall Street Journal as well as interviews with former employees.
- Binance and Binance.US have been much more intertwined than the companies have disclosed, mixing staff and finances and sharing an affiliated entity that bought and sold cryptocurrencies, potentially giving Binance access to U.S. customer data.
- The US SEC and the Justice Department have been probing the relationship of Binance to Binance.US since at least 2020, according to subpoenas and people familiar with the matter.
The cryptocurrency exchange, Binance, which has expanded to become the world’s largest, created its US-based platform, Binance.US, to distance itself from the scrutiny of US regulators, according to messages and documents from 2018 to 2020 reviewed by the Wall Street Journal, and interviews with former employees.
The strategy involved licensing Binance’s technology and brand for Binance.US to appear independent, providing a way to shield Binance.com, the main platform, from US regulators’ scrutiny. If regulators conclude that Binance.US has links that mean Binance controls a US company, they could claim power over Binance’s entire business.
The US SEC and the Justice Department have been probing the relationship between Binance and Binance.US since 2020, according to people familiar with the matter and subpoenas.
In September 2021, a Texas financial regulator filed a lawsuit against Binance.US for operating without a license and not providing financial information from its largest shareholder, Binance CEO Changpeng Zhao.
On Thursday, a bipartisan group of senators asked Binance to answer a series of questions regarding allegations that it had “hidden basic financial information from its customers and the public.”
Binance’s chief strategy officer, Patrick Hillmann, stated last month that the exchange expects to pay monetary penalties to settle existing US regulatory and law-enforcement investigations.
Binance’s relationship with Binance.US was also revealed when a Binance staffer in Shanghai turned on trading for the US platform early in September 2019, resulting in an exchange on a Binance chat group on the messaging app Telegram. Developers in Shanghai maintained key software functions at Binance.US at least through the summer of 2021.
Binance and Binance.US also shared an affiliated entity that bought and sold cryptocurrencies, mixing staff and finances, which was not disclosed. The exchange’s close relationship with Binance.US is being examined by the SEC.
In contrast to the FTX platform, whose improper relationship with an affiliated trading firm resulted in billions of dollars of lost customer money, the Binance.US spokeswoman stated that it has never traded or lent out customer funds.