Binance, a leading cryptocurrency exchange, has been accused of hiding its ties to China, despite claiming to have left the country after a government crackdown in 2017. According to a recent report by the Financial Times, Binance’s CEO, Changpeng Zhao, and other senior executives have allegedly instructed employees to conceal the company’s presence in China, including an office that remained operational until 2019. The report also revealed that a Chinese bank was used to pay Binance employees’ salaries.
The findings have added to the ongoing fear, uncertainty, and doubt (FUD) surrounding Binance, as the exchange is already facing allegations of violating US regulations. Although CZ has repeatedly defended his statements that most of his employees left China after 2017, the report contradicts his claims. The report further suggests that Binance deliberately failed to disclose its executive offices’ location to avoid regulation, according to regulators.
The internal communications between Binance and its Chinese employees show that Binance executives instructed their employees to “hide” the offices in China. Binance has responded by stating that these are “ancient history” and that it is focused on the future. According to Binance, the current accusations are purely against its operations, not its Chinese ties. Despite these denials, CZ has denied Binance’s ties to China, and there exists a possibility that the leaked communications may have been taken out of context.
Binance Employees Were Allegedly Advised To Use VPNs To Hide Their Chinese Presence
The Financial Times report further alleges that Binance’s Chinese ties run deep. The report claims that Binance employees were paid through a Shanghai bank, and even two years after Binance supposedly left China, payroll employees still took part in a tax session in China. These actions raise concerns that Binance executives have something to hide. In the same year, Binance hired data analysts and clearing specialists in China, and the report suggests that the company also used virtual private networks (VPNs) to hide its presence in China.
The US Congress recently approved the new S686 bill, known as the “Tiktok” bill, which imposes a minimum sentence of 20 years in prison and a $250,000 fine for using a VPN to access banned applications in the United States. This bill targets individuals who use such private networks to access banned apps illegally. The CFTC lawsuit also claims that Binance advised its US customers to use VPNs, which could have serious consequences for the exchange and CZ if true. Furthermore, a former Binance employee claims that most of the key developers remained and operated from China, which could have significant implications given the current geopolitical context.
Although Binance denies having any technology in China, including servers or data storage, US authorities are reviewing most Binance deals, including the Binance US deal to acquire Voyager Digital. Given the geopolitical situation, the CFTC and US authorities are unlikely to overlook any links Binance may have to China. While Binance keeps emphasizing that no government, including China, has access to Binance data, it is not true when responding to lawful and legitimate law enforcement requests.