Troubled cryptocurrency exchange Binance is furiously promoting its compliance theater efforts but regulators across the globe continue to throw rotten fruit at the stage.<\/p>\n
As of Thursday, U.K. bank Santander informed its 14 million customers that it was \u201cstopping payments from Santander accounts to Binance wherever possible.\u201d Withdrawals from the exchange are still permitted, but further deposits to Binance are off-limits \u201cto help protect you from fraud.\u201d<\/p>\n
Santander\u2019s move follows a similar step by U.K. banking giant Barclays earlier this week, which came in response to the consumer warning issued in late June by the U.K. Financial Conduct Authority (FCA) regarding Binance\u2019s local offshoot lacking permission \u201cto undertake any regulated activity in the U.K.\u201d<\/p>\n
Other U.K. financial institutions previously saw fit to curtail their customers\u2019 access to Binance even before the FCA warning, while the exchange announced this week that it had been forced to suspend Euro deposits from the Single Euro Payments Area \u201cdue to events beyond our control.\u201d<\/p>\n
On Wednesday, Poland\u2019s Financial Supervision Authority (KNF) added to Binance\u2019s burgeoning global pariah status by recommending \u201cspecial caution when using the services of Binance group entities\u201d due to the \u201csignificant risk\u201d of consumers losing their invested funds.<\/p>\n
The KNF missive specifically cited warnings recently issued by regulators in other jurisdictions, including the U.K., Germany, Thailand, and the Cayman Islands, although the list of Binance\u2019s \u2018here be dragons\u2019 jurisdictions also includes Japan, South Africa and the Canadian province of Ontario, while multiple regulatory authorities in the U.S. are reportedly investigating Binance for alleged money laundering and tax offenses.<\/p>\n
Comply or die<\/strong><\/p>\n Binance\u2019s traditional response to regulatory smackdowns includes increasingly hollow claims of having made applications to operate legally within this or that jurisdiction, although none of these applications ever seems to result in Binance garnering approval to operate a lemonade stand, let alone safeguard significant volumes of customer funds.<\/p>\n On Tuesday, Binance\u2019s CEO Changpeng \u2018CZ\u2019 Zhao posted his latest testimonial to the joys of compliance, in which he suggested that the crackdowns are \u201cpositive signs that an industry is maturing\u201d and Binance \u201cwants to be a positive contributor\u201d to this maturation.<\/p>\n CZ took a page out of the Mark Zuckerberg playbook by claiming that Binance \u201chaven’t always got everything exactly right, but we are learning and improving every day.\u201d For years now, Zuck has been offering these types of \u2018I know we can do better\u2019 pseudo-apologies following each expos\u00e9 of Facebook treating its user data as private property.<\/p>\n But after every public apology tour, Zuck sticks his hands right back into the user data cookie jar, exposing the theater behind these mea culpas. CZ is being equally disingenuous and performative here, and anyone who isn\u2019t trying to get their holdings off Binance right this second probably deserves their ultimate fate.<\/p>\n CZ did his best to fight this narrative by touting the 500% expansion in Binance\u2019s international compliance team and advisory board since 2020, as well as plans to \u201cdouble our team size\u201d by the end of 2021. You\u2019ll notice there are no actual head counts provided here, so for all we know this fivefold increase could mean Binance now boasts a whopping five part-timers dedicated to compliance issues.<\/p>\n Binance did just announce a new director of compliance, former eToro man Jonathan Farnell, while Binance\u2019s little-used American subsidiary Binance.US hired Manuel Alvarez, a former California state financial commissioner, to beef up its compliance capabilities. However, internal Binance documents predating the Binance.US launch spoke of the planned offshoot as a way to \u201cinsulate Binance from U.S. enforcement,\u201d so one can really only be so impressed by this latter roster addition.<\/p>\n THE DIGITAL NOMAD FINDS A HOME?<\/p>\n CZ\u2019s public letter also touted Binance\u2019s cooperation with law enforcement agencies to \u201ccrack down on cybercrimes such as money laundering, terrorist financing and scams.\u201d This newfound commitment to assisting law enforcement in curbing criminality represents quite the turnaround from just a couple years ago, when a Chainalysis report found that Binance was the single largest exchange recipient of illicit BTC, accounting for well over one-quarter of the total annual inflow.<\/p>\n Publicly, CZ may play dumb as to why his company has been the subject of such regulatory pushback but this is the same man who boasts about his company not having any physical headquarters, as well as his habit of keeping on the move, preferring to stay in an ever-changing series of AirBNBs across the globe rather than settle in any one location for too long.<\/p>\n CZ appears convinced that this pattern of behavior embodies a cool \u2018digital nomad\u2019 vibe, although the authorities may view someone who sleeps with his shoes on, his laptop under his pillow and his passport clutched in his teeth in decidedly less romantic terms.<\/p>\n However, Binance recently changed its terms of service for resolving customer disputes, stipulating that all such matters will be administered by the Hong Kong International Arbitration Centre. As recently as January, these matters were handled by the Rules of Arbitration of the International Chamber of Commerce (which calls Paris home).<\/p>\n Not for nothing, but this week CZ tweeted a picture of a meal he was consuming that sharp-eyed viewers tagged as coming from Hong Kong, a fact that CZ confirmed. Binance also registered a company (Binance Limited) in the territory on May 1, despite having dissolved a different company (Binance (Hong Kong) Limited) in September 2018.<\/p>\n Binance began life in China in 2017 but upped sticks shortly thereafter in response to Beijing\u2019s plans to ban crypto trading. It\u2019s more than a little odd that Binance would seek a return to HK given Beijing\u2019s increasingly tight control over the special administrative region but perhaps CZ has compromising photos of Xi Jinping or something.<\/p>\n Actually, scratch that, as Thursday brought widespread reports of Beijing erecting new bricks of its \u2018great firewall\u2019 around several China-facing exchanges, including Binance and Huobi. These reports followed not long after the deputy governor of the People\u2019s Bank of China issued a statement on the need to crack down on stablecoins (like Binance USD).<\/p>\n Fiat vendor: Not a car, but a dodge all the same<\/p>\n Meanwhile, Binance\u2019s regulatory woes have left the company searching for new \u2018fiat vendors\u2019 to ensure the site\u2019s liquidity rails are sufficiently greased. More commonly known as the Global P2P Merchants Program, it offers boundless opportunities for individuals who can provide \u201ca more competitive fee structure or streamlined user experience\u201d than currently on offer.<\/p>\n Binance has been running this program for well over a year now, but with the company losing fiat on-ramps faster than Rudy Giuliani loses state law licenses, the need for fiat vendors has never been more acute. Some of the usual Binance critics have had great fun suggesting alternative names for this program, including \u2018money mule.\u2019<\/p>\n The initial application form to become a fiat vendor includes such queries as the key countries\/regions that one services, defining one\u2019s fee structure and details (if any) of one\u2019s Know Your Customer process. Presumably, if one passes to the second round of this review process, one is asked whether one possesses a suitcase with a false bottom and how many rolls of $100 bills can be stuffed up one\u2019s back passage.<\/p>\n All in all, a pretty solid 72 hours or so for the Binance Group and CZ, who is seemingly bent on becoming the next Bond villain. We\u2019ve started an office pool here at CoinGeek as to the title of this opus\u2014Live and Let Bi? Dr. No Withdrawals? Frankly, my money\u2019s on Cryptopussy.<\/p>\n