The most recent study published by the Wall Street Journal has once again caused widespread upheaval in the bitcoin industry.
As per their sources, Binance, the most significant participant in the business, has been formulating a plan to avoid the possibility of being prosecuted by the relevant authorities in the US.
In 2019, the company took the bold step of establishing a U.S. entity to protect itself from any potential legal repercussions that might arise from conducting business in the United States.
It would appear that the company has been skating dangerously close to the edge, and the possibility that authorities would investigate them in the United States has been hanging over them for a considerable time.
According to report (1) published in The Wall Street Journal, the acts of the cryptocurrency exchange could be interpreted as a show of desperation, a last-ditch attempt at preventing coming into contact with the regulatory authorities.
It is not difficult to envision the urgency that had to be driving the company’s management as they frantically tried to establish up a U.S. entity, hoping without hope that this would be just enough to shield themselves from legal penalties.
Excuse Over Compliance Problems
The paper also asserts that there is a closer connection between Binance, which was established in 2017, and Binance.US, an affiliate of the former firm, than the companies have let on. Both companies share workers, funds, and a third business that is associated with them and trades cryptocurrency.
It was mentioned that the United States accounted for one out of every five customers of the corporation, despite China and Japan accounting for the vast majority of the company’s clientele. San Francisco is the location of Binance. U.S.’s operations
Binance execs' texts, documents show plan to avoid U.S. scrutiny – WSJ https://t.co/UrZmLF7q4d pic.twitter.com/VmUQYBHcLb
— Reuters (@Reuters) March 5, 2023
In addition, the digital wallets’ source code in the United States was maintained by developers in China working for Binance. As a consequence, Binance, being a global corporation, had access to information regarding its customers in the United States.
Following that, a representative of the corporation issued an email to Reuters stating:
“We have already acknowledged that, during those early years, we did not have enough compliance and controls in place…
When it comes to compliance, our company is substantially different from what it was back then.”
We Could Have a “Nuclear Fallout,”
According to the Financial Journal, a Binance executive alerted coworkers in a private conversation in 2019 that a civil suit from U.S. regulatory agencies, who had prefigured an upcoming initiative on uncontrolled offshore crypto companies, would be like “nuclear fallout” for the firm and its chiefs.
A group of senators representing both political parties issued an order to Binance, a cryptocurrency exchange that had been a competitor to the now-defunct cryptocurrency behemoth FTX, to provide specific information on its daily operations in response to allegations that it engaged in illegal practices.
In their letter, the senators listed the claims that the Department of Justice had made against the cryptocurrency exchange. They also stated that the company lacked openness.
In 2018, the Department of Justice began a criminal probe against Binance and CEO Changpeng Zhao due to concerns that the exchange had broken laws in the United States pertaining to the prevention of money laundering and the imposition of sanctions.
The Department of Justice has not yet decided whether to bring charges against the company as a whole or against certain individuals.