Binance and anti-money laundering, CZ rejects allegations
Binance and anti-money laundering, CZ rejects allegations
Regulation

Binance and anti-money laundering, CZ rejects allegations

By Eleonora Spagnolo - 25 Jan 2022

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Binance and its CEO Changpeng Zhao have once again landed in the eye of the storm over a Reuters article about the anti-money laundering procedures followed by the exchange. “FUD,” was CZ’s comment to the news reported by the agency. 

Anti-money laundering, the accusations addressed to Binance

It all starts from a Reuters article according to which Binance has weak controls on its customers as far as anti-money laundering regulations are concerned. Moreover, it would not have a real legal seat and this makes it unclear which licenses Binance must have in order to operate. 

It is known for sure that after the restrictions imposed by China in 2018, Binance had to move from the country where it was born, and CZ initially opted for Malta. But currently, Malta is not the home of the exchange, as the island would have had decidedly strict anti-money laundering regulations or at least that’s what Reuters claims.   

Citing testimonies from former Binance employees and partners, the article claims that Binance has hidden information from the authorities, that the same employees have expressed concern about the loose KYC procedures, that the exchange has continued to source clients in countries with high-risk of money laundering such as Russia and Ukraine against the advice of its own compliance department. One of the most serious stories reported is that the German police have set their eyes on Binance on at least a couple of occasions for suspicious transactions, including one attributed to an Islamic bomber accused of killing 4 people in Vienna in November 2020. There is something about it that causes turmoil. 

The same article also reports words from Binance representatives who instead claim that what is depicted is biased.

CZ’s response

Changpeng Zhao responded harshly, via Twitter:

“FUD. Journalists talking to people who were let go from Binance and partners that didn’t work out trying to smear us. We are focused on anti-money laundering, transparent and welcome regulation. Action speaks louder than words. Thank you for your unwavering support!”.

FUD is an acronym that stands for Fear, Uncertainty, and Doubt and indicates the tendency to spread false information, often to generate fear

Probably, the Binance CEO’s thesis is that Reuters juxtaposed partial information with the purpose of discrediting Binance and with it the entire crypto sector, which is often (still) described by mainstream media as an area where dirty money circulates, as if crime is not also incurred with dollars and bank accounts. 

This is probably what outraged not only the CEO of Binance but also a community that seems to give him a lot of confidence, as it is evident in the messages arrived on Twitter that encourage CZ not to give up. Cause Binance can be stopped but the progress brought by cryptocurrencies cannot be prevented. This is the thesis of many. 

Binance Anti-Money Laundering
New allegations for Binance

The Vienna attack

However, what attracts the most attention in the lengthy Reuters report is the part about the exchange’s ties to the bomber who killed four people in Vienna in November 2020

Reuters claims that German police asked Binance for information about transactions made by two people suspected of assisting the bomber, while also making cryptocurrency transactions with Binance. Reuters was unable to say how Binance responded to German police. It took CZ to unravel the mystery once again via Twitter:

“A suspected bad guy creates an account with a bank and a crypto exchange. The bank is ok, the crypto exchange is bad.

Binance uses the same or stronger AML tools as banks.

Binance helps all law enforcement agencies world wide with their cases. We get many thank you letters”.

The same Reuters reported that the money transacted on Binance came from a bank account (and it couldn’t be otherwise). But the narrative is that the bank is good and the exchange is bad. 

Binance and regulation

Binance actually has repeatedly shown that it cooperates with authorities in cases of illicit uses of the exchange. Just as it has cooperated with authorities to be compliant with regulations. This is also why the main platform accessible from binance.com, is not usable in some jurisdictions that instead have a dedicated platform. For example, the United States and Turkey have Binance US and Binance TR respectively, designed to be compliant with the laws of the two countries. 

Binance has even gone so far as to suspend some instruments deemed non-compliant with the laws, as happened with stock tokens

Changpeng Zhao himself admitted that in the 4 years of life of the exchange, born in 2017, mistakes have probably been made, but Binance wants to cooperate with the authorities and indeed is certain that it will be regulation that will make the sector flourish.

Eleonora Spagnolo

Journalist passionate about the web and the digital world. She graduated with honours in Multimedia Publishing at the University La Sapienza in Rome and completed a master's degree in Web and Social Media Marketing.

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