Binance Kept Low Money-Laundering Checks

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Binance, one of the most heard names in the world of cryptocurrencies, has been found to have kept weak money-laundering checks as per the documents found by Reuters later on Friday evening.

In the words of Reuters, In public, Zhao repeatedly said he welcomed regulatory oversight, and Binance lauded its anti-money laundering programme. But at the same time, Binance was withholding information about its finances and corporate structure from regulators, at least eight of whom have warned consumers about the risks of using the exchange. Binance also maintained weak checks on customers, despite concerns raised by senior company figures, and acted against its own compliance department’s recommendations.”

In a statement made by Binance spokesperson, he told Reuters: “As the leading cryptocurrency and blockchain ecosystem, we are both leading and investing in the future technologies and legislation that will set the crypto industry on the road to becoming a well-regulated, secure industry.” The company didn’t comment in response to detailed questions.

Reuters spoke with dozens of former Binance executives, advisers, and business partners and reviewed hundreds of documents, including sensitive correspondence between Binance and national regulators and internal corporate messages.

Binance has been found to have operated outside of the rules that regulate traditional financial firms and many crypto competitors, according to the investigation. For example, Binance has offered products that many national regulators do not allow locally registered companies to sell due to its opaque organisational structure. In addition, Binance has consistently refused to say where its major online exchange is based, making it difficult for regulators to monitor its actions. It has also reduced the number of time-consuming client background checks.


Binance was founded by Zhao in July of 2017. Zhao claimed Binance marked a “new paradigm” in world finance in a report seeking funding from investors. Binance, he claimed, would be a global marketplace for lesser cryptocurrencies born due to bitcoin’s rise in popularity.

Zhao planned his global development from a modest Shanghai office with a close-knit team, flush with $15 million raised in an initial coin offering (ICO). Crypto start-ups issue and sell virtual tokens to investors. Bobby Lee, a Shanghai-based crypto entrepreneur and Zhao’s buddy, told Reuters that Zhao’s drive, determination, and “appetite for danger” struck him at the time.

By late August, the exchange had amassed 120,000 users, most of which were from the United States, China, and Japan. Traders could sign up for a simple Binance account with just an email address and no other personal information. Each trade and withdrawal came with a modest fee from Binance.

But, like a slew of other Chinese ICOs, Binance’s debut drew unwanted scrutiny from Chinese regulators. Beijing banned token issuances in September 2017 as part of a broader crackdown on cryptocurrencies. The Chinese central bank claimed recent ICOs “seriously disrupted the economic and financial order,” without citing Binance.

Binance was shifted out of mainland China by Zhao. However, according to corporate records, he established a new Binance company in Hong Kong in late September, managed by a Cayman Islands holding company.

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Shambhavi Soni
Shambhavi Soni

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