Binance Employees Helping Mainland China Residents Subvert KYC Norms?

Photo by denis pan on Unsplash

The demand for hazardous assets, such as Bitcoin, has seen a considerable increase recently due to rising global hyperinflation and the fear of a worldwide banking catastrophe.

In mainland China, the trading of cryptocurrencies has been illegal since 2017, and the ownership of digital assets such as Bitcoin was made illegal in 2021.

Despite this, people living in mainland China are keen to participate in the ongoing global financial revolution in any way possible.

According to a report published by the media outlet CNBC (1), some Binance staff have apparently been teaching people from mainland China how to get around the Know Your Customer (KYC) features that the business has implemented.

It has been reported that people of Mainland China have been instructed on how to falsify bank documents and produce fraudulent verification of physical addresses.

Binance employees and Angels have, presumably, instructed residents of Mainland China about establishing their Virtual Private Networks (VPN) & enrolling as citizens of Taiwan, after which they will transfer their nationality back to that of Mainland China.

In addition, users of proxies are directed to a dedicated VPN-free domain name and a variant of the Binance app for Android specifically geared for consumers in mainland China interested in gaining exposure to Bitcoin and other cryptocurrencies.

 

Binance’s KYC Is Called Into Question

The demand for hazardous assets, such as Bitcoin, has seen a considerable increase in recent times due to rising global inflation and the fear of a worldwide banking catastrophe.

In addition, a ban on Bitcoin is not technically feasible due to the widespread use of the cryptocurrency around the world and the high degree of decentralization of the node validators.

Allegedly, workers, volunteers, and customers of Binance released video tips and documentation demonstrating to mainland people how to fake their home nation to obtain Binance’s debit card. This was done in order to gain access to Binance’s trading platform.

As a direct consequence of this, security experts are concerned that terrorist activities and money laundering may dilute the consumer base of genuine users on Binance.

Also, it is relatively simple for a hacker based in North Korea to create an account on Binance and use it to wash stolen cryptocurrency.

If previously I had an eight out of ten concern about Binance from the regulatory standpoint and from a national security viewpoint, this raises my concern to a ten out of ten,” Sultan Meghji, a current professor at Duke University and a former chief innovation officer at the FDIC

Nevertheless, a spokesman for Binance denied the allegations that the workers of the exchange are assisting people living in Mainland China in breaking the rules that are now in place.

“We have taken action against employees who may have violated our internal regulations, such as improperly soliciting or offering recommendations that are not allowed or in line with our standards. “

According to what a spokeswoman for our company shared with CNBC, “We have stringent procedures that require all users to pass KYC by giving us their nation of citizenship and other personal identity information.”

 

Meanwhile

Despite the restrictions imposed by Mainland China, the Bitcoin market has seen substantial expansion. In the countries of El Salvador and the Central African Republic, Bitcoin is already being used as legal money.

Because an increasing number of nations and jurisdictions acknowledge Bitcoin as a digital asset with inherent value, the Chinese government is likely going to relax its prohibition on cryptocurrencies in order to attract overseas investment.

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