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  • Writer's pictureVeronica Irwin

Binance said it was governed by the 'law of Malta.' Well …

The cryptocurrency exchange has been dodging the rules its competitors have to follow, according to a Reuters investigation.


1/21/2022


By establishing an opaque corporate structure and avoding detailed questions from partners, regulators and law enforcement, Binance is dodging many of the rules other financial firms are forced to follow. That’s according to a new Reuters investigation, which reviewed dozens of private documents including copies of encrypted Telegram messages, internal regulatory reports and letters sent by law enforcement.


Binance has long struggled with regulation, having publicly left China in 2017 and being banned from the U.S. in 2019. In 2018, founder and CEO Changpeng Zhao said Binance would operate its exchange from Malta, declaring to a group of the island’s elite that “Malta came at a time when regulatory clarity was very much needed.”

But according to Reuters, Binance got cold feet as early as 2019, telling the authorities that it would not proceed with the licensing application. It also terminated an agreement to donate to a Maltese charity for cancer patients in 2020. Simultaneously, Binance was still telling users the exchange was "governed by the law of Malta."


The Reuters investigation fit those findings within a larger trend of Binance hiding information about its finances and licensing to avoid regulation. The investigation also found that the company regularly ignored warnings from its own compliance department about money laundering and fraud risks, and in at least some cases denied requests for information by German authorities who were looking into incidents of fraud. Reuters also found that an Islamist gunman who killed four people in Vienna had made transactions on Binance, and the German police had requested more information.

A Binance spokesperson said that much of Reuters' information was outdated or incorrect, but declined to answer detailed questions. “As the leading cryptocurrency and blockchain ecosystem, we are both leading and investing in the future of technologies and legislation that will set the crypto industry on the road to becoming a well-regulated, secure industry,” the company said.


Protocol Link: https://www.protocol.com/bulletins/binance-compliance-investigation

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