Last weekend, the UK Finance Conduct Authority (FCA) issued a consumer warning against Binance Markets Limited, a UK subsidiary of Binance Holdings Limited. A report by crypto news website decrypt.co confirmed that the warning is related to the firm’s anti-money laundering standards.
The Saturday announcement clarified that Binance Markets Limited is not currently permitted to undertake any regulated activities without the prior written consent of the FCA. In the U.K., cryptocurrencies such as bitcoin and ether, are unregulated but certain trading products like security tokens, futures, and options trading, are regulated.
Beginning January 2020, crypto firms were required to register with the FCA, before doing business. As per reports, just six firms have registered with nearly 64 have withdrawn their applications. FCA has strict standards on “fit and proper” criteria for approvals. Binance reportedly withdrew its FCA application in mid-May.
WazirX Binance troubles in India
In India, the anti-money laundering enforcement department is investigating alleged foreign exchange violations by WazirX. The Indian exchange was bought by Binance a few years back. The directors of WazirX were issued a show-cause notice under Indian foreign exchange law. According to a press note by the law enforcement agency, the Indian exchange was used by Chinese nationals to launder money out of India by transferring crypto assets from WazirX to Binance.
Binance troubles in Japan and USA
On 25 June 2021, the Japanese Financial Services Agency (FSA), issued a warning notice to Binance Holdings Ltd. and CEO Changpeng Zhao for providing crypto exchange services to Japanese customers without registration. The crypto exchange is required to obtain a registration in Japan under the existing regulations but has failed to do so. A similar notice was issued in March 2018.
In the US, Binance Holdings is under investigation by the Justice Department and Internal Revenue Service. As first reported by Bloomberg, U.S. officials are investigating alleged money laundering and whether the exchange was used to conceal illegal transactions, including proceeds from theft and drug deals. According to AML investigating technology provider Chainalysis, nearly 27.5% of illicit bitcoin ended up in Binance in 2019.
In April 2021, German financial watchdog BaFin warned the exchange over “stock tokens” for alleged violation of European Union securities law. The largest cryptocurrency exchange has recently received increased scrutiny from regulators and the above are only a few such examples.
The largest cryptocurrency maintains an opaque structure with the charismatic founder Changpeng “CZ” Zhao famously saying the company has no headquarters. The crypto exchange started in China and then moved to Japan in 2017, followed by Malta in 2018, and since 2019 reportedly is based in the Cayman Islands. The founder CEO is based in Singapore according to various news reports.