D.he bad news about the Binance crypto exchange just doesn’t stop there. The company operates all over the world and is considered one of the largest trading centers for digital currencies – but also one of the most inscrutable. The latest evidence of this is provided by the British financial regulator FCA. She estimates that this company structure around Binance cannot be properly monitored.
Therefore, the platform poses a significant risk for consumers, according to documents published on Wednesday. In addition, Binance’s responses to two inquiries from the agency regarding the business model and digital versions of shares were viewed by the FCA as a refusal to provide information. A spokesman for Binance told the Reuters news agency that they were cooperating with the agency and wanted to develop a policy that would protect consumers. In June, the FCA had already banned the subsidiary Binance Markets from engaging in activities that are subject to market regulation (FAZ of June 29). A reason did not follow at the time. The major British banks HSBC and Barclays have also blocked payments from customers to Binance.
Binance has long been considered a reliable manufacturer of scandals: At the beginning of the week, for example, allegations of manipulation arose. An alleged former big data engineer at the exchange claimed that Binance had an overview of the liquidity level and was influencing the price “with the intention of making a profit from it”.
But the company was also targeted by the supervisors in Germany: BaFin accuses the operators of the German platform of violating the prospectus requirement. That can be expensive: the offense can be punished with a fine of up to five million euros or, alternatively, three percent of the total turnover of the last financial year. However, the operators resist and speak of a misunderstanding.
But the number of misunderstandings makes one suspicious. In the United States, for example, documents were published last fall showing that Binance had created a complex corporate structure specifically to deceive the American regulatory authorities. In the dispute over the new direction, the head of the American Binance branch recently resigned. Otherwise, the complex network of the company with its offices in the tax havens of the Cayman Islands and Seychelles does not exactly inspire confidence.
All the stories bring back bad memories of the once world’s largest exchange, Mt. Gox. This was the first global trading exchange for digital currencies and failed spectacularly. At that time, 650,000 Bitcoin disappeared – the equivalent of more than 30 billion dollars today. At the time it was also said that Mt. Gox had been hacked, but it was probably an insider who stole the money.