Binance, the world's largest cryptocurrency exchange by trading volume, has been under scrutiny for regulatory compliance concerns over the past few weeks. Now, the exchange faces a new problem after its US partners confirmed that the company run by his Binance CEO Changpeng Zhao is operating on the platform.
His Binance.US, the US subsidiary of the global exchange, admitted as much in a recent blog post. The post was written in response to Forbes' allegation that Binance violated US securities laws by allowing US citizens to trade on its platform.
In a post, Binance.US explained that Zhao's company, Beijing Technology, operates on his Binance main exchange. However, the US partner said it "has no visibility or control over how Beijing Technology uses the Binance.com platform."
This approval raises new questions regarding Binance's operations and compliance with regulatory requirements. Binance has come under pressure from regulators around the world, with several countries issuing warnings or taking action against the exchange in recent months.
The U.S. Securities and Exchange Commission (SEC) has been particularly active in fighting cryptocurrency exchanges that violate securities laws. In 2019, the SEC issued a statement warning that cryptocurrency exchanges that facilitate the trading of digital assets that qualify as securities must register with the SEC.
Binance previously stated that it does not operate in the US and that US residents are prohibited from trading on its platform. However, the exchange has been accused of using a virtual private network (VPN) to allow US citizens to disguise their location and trade on the platform.
Binance has also been criticized for its lack of transparency and accountability. The exchange is registered in the Cayman Islands, a jurisdiction known for its secrecy and lack of regulation. Binance has also been accused of manipulating trading volumes and using other questionable tactics to gain market share.
The approval of Binance's US partner could increase regulatory pressure on the exchange. The SEC and other regulators are expected to continue to scrutinize Binance's operations, and it remains to be seen whether the exchange will be able to meet their requirements.
Binance customers are keeping a close eye on how the exchange reacts to the latest revelations about its operations. The cryptocurrency industry remains largely unregulated, with customers relying on exchanges such as Binance to provide a secure platform for buying and selling digital assets. Failure to do so could seriously affect the future of the industry.