Leaked data on Binance shows that the exchange might have evaded US regulations by setting up a US subsidiary as we are reading more in today’s binance news.
Forbes said that the leaked data on Binance shows how the exchange evaded regulations but the CEO of the exchange Changpeng Zhao, denied the documents originated from a current or a former exchange employee. Binance used its American subsidiary to evade regulations according to the Forbes documents but of course, the exchange denied.
Forbes alleged that Binance established BAM trading or now Binance.US back in 2018 with the motive to distract regulators by feigning attempts at compliance. The report described that Binance’s strat3gy was to “bait” and then “switch” tactic. The company made minor efforts to comply with the regulations while also instructing potential customers to evade geographical restrictions over the VPNs and other means.
Forbes suggested that Binance aimed to undermine the anti-money laundering regulations and outlined the strategies to distract many regulators and even joined the Department of Homeland Security Cornerstone Program in order to find regulatory loopholes. The document was dubbed the Tai Chi document as an allusion that the martial arts principle of using the opponent’s own weight against him.
In other words, the strategy leveraged the complexities of the regulation to their own detriment. Forbes didn’t disclose the source of the leak. It claims that the document was authored by Harry Zhou who is a former Binance employee who is a co-founder of Koi Trading, a San Francisco-based trading desk. Binance CEO however, Changpeng Zhao denied the claims and said that the article by Forbes “hinges on a 3rd party document” that was not produced by a current of former employee:
“Anyone can produce a strategy document, but it does not mean Binance follows them. We do not acknowledge the alleged document.”
Zhao added that his exchange complies with different regulatory bodies and with many law enforcement agencies adding that they work with aML companies like Ciphertrace. He affirmed that Binance.US is a legitimate subsidiary with strong restrictions and operating procedures that are set in place. given the fact that Forbes hasn’t released the leaked document, it is quite impossible to conclude which accounts is correct. Forbes contracted regulators as their comments have not fully confirmed its allegations.
In the meantime, investigators like the FBI declined to comment, and the document that circulated among law and accounting firms introducing the possibility that these documents could be leaked to the public in the future.
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