The regulator’s 2021 supervisory notice referred to Binance’s ownership structure as “complex” and with an “extensive geographical spread”, factors that appeared to be “hindering the provision of adequate and reliable information to the FCA”. It appears nothing has happened yet to change that view.
At the time that FCA said the firm was “not capable of being effectively supervised”. The regulator said it did not comment on specific companies but its official position on Binance had not changed since 2021, when it barred the business from regulated activity in the UK. Here’s more from the Guardian’s global technology editor Dan Milmo:Īs part of any UK process, Binance will need to register with the FCA, which requires crypto-exchanges to prove they have systems in place to prevent money laundering and terrorism financing. Binance in the past had said it will still do “everything” to change the FCA’s mind. The SEC’s lawsuit against Binance will likely make it harder for the company to curry favors with regulators in other countries, including the UK, where the Financial Conduct Authority (FCA) has said Binance is not capable of being regulated. Instead, the company worked to quickly register users instead of conduct money laundering checks, former employees and advisers told Reuters. The company, Binance.US, publicly said that it would handle US investors, who would go through a rigorous screening and validation process. Then in October, Reuters published another investigation into Binance’s plan to set up a US operations that could appear to be independent, for the sake of US regulations, but would actually be a subsidiary of Binance. The funds came from hacking, investment frauds and illegal drug sales. In June of last year, Reuters reported that at least $2.35bn in illicit funds were exchanged through Binance. The investigations make it clear that much of what the SEC has sued Binance after had been coming to the surface for years. The complaint also charges Samuel Lim, Binance’s former chief compliance officer, with aiding and abetting Binance’s violations.Before the SEC filed an official complaint against Binance for trying to bypassing US regulatory laws, Reuters published two investigative reports last year that detailed how the company became a conduit for money laundering and how it built up a plan to avoid US regulators. In March, the Commodity Futures Trading Commission filed an enforcement action against Binance and Zhao in the US District Court for the Northern District of Illinois charging them with numerous CTFC violations. This follows other actions US agencies have taken against the firm and its leadership. “The public should beware of investing any of their hard-earned assets with or on these unlawful platforms,” Gensler said.
SEC Chair Gary Gensler said in a written statement that Zhao and Binance “engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law".
The lawsuit lays out the extent to which the firms owners knew of the alleged legal violations: "Binance’s CCO bluntly admitted to another Binance compliance officer in December 2018, “we are operating as a unlicensed securities exchange in the USA bro.”
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