Binance’s Secret Ties to China Exposed as Hidden Links Discovered Years After Departure
Binance is one of the world’s largest cryptocurrency exchanges, with a user base of over 100 million people globally. However, in recent months, the company has been embroiled in regulatory trouble, facing lawsuits and investigations from various regulatory bodies around the world. A recent report has shed light on the exchange’s deep and extensive ties to China, even years after it officially left the country.
Binance Established Secret Links With China
Binance concealed significant ties to China for an extended period, in contrast to executives’ statements that the cryptocurrency exchange departed the country following a crackdown on the industry in late 2017.
CEO Changpeng Zhao and other high-ranking officials directed Binance staff to hide the company’s Chinese operations, which included an office that remained in use until at least the conclusion of 2019 and a Chinese bank that was utilized to compensate some employees.
In a company messaging group in November 2017, Zhao said:
“We no longer publish our office addresses…people in China can directly say that our office is not in China.”
The internal documents highlight how Binance, currently the largest cryptocurrency exchange worldwide, has concealed the scope and whereabouts of its operations amidst increased regulatory scrutiny of crypto-related activities.
Binance CEO, Zhao, has claimed that, with the exception of “a small number of customer service agents,” most of the exchange’s employees departed China after the government’s 2017 crackdown on cryptocurrencies.
Binance was sued by US regulators on Monday for allegedly providing illegal services to American clients. The Commodity Futures Trading Commission accused Binance of “deliberately” withholding information on the location of its executive offices and misleadingly asserting that its headquarters was based on Zhao’s whereabouts as part of a strategy to evade regulation.
Binance FUD Continues To Rise
At the end of 2019, Binance employees were in talks about a media report indicating that the company was setting up an office in Beijing. In response, one message cautioned, “Reminder: publicly, we have offices in Malta, Singapore, and Uganda. Please refrain from acknowledging any offices in any other location, including China.”
Binance officially said:
“It is unfortunate that anonymous sources are citing ancient history (in crypto terms) and dramatically mischaracterizing events. This is not an accurate picture of Binance’s operations.”
Despite public scrutiny, Zhao has repeatedly denied that Binance has any association with China, as seen in a blog post from last year where he stated that only “a small number of customer service agents” were still present in China as of late 2018. It is noteworthy that Zhao was born in China but has Canadian citizenship, having relocated to Canada as a child.
Binance stated that the original founding team members situated in Shanghai left China only two months after the company was established, before the incorporation of the company, due to crackdowns in the crypto industry. The exchange also emphasized that it had never been registered or incorporated in China.
According to internal company documents, China remained a crucial component of Binance’s operations even after the country’s strict regulations on cryptocurrency in 2017. In 2018, employees were informed that their salaries would be disbursed via a bank located in Shanghai. Similarly, in 2019, Binance asked employees on the Chinese payroll to attend a tax session in an office situated in China.
One of Binance’s employee onboarding documents reportedly instructed new hires operating in China to install VPNs on their devices. Furthermore, the recent CFTC lawsuit against Binance alleged that the exchange instructed its US clients to use VPNs in order to hide their geographical location.
“China Crypto Pump” Hype: Could it be the Next Big Thing for Cryptocurrencies?
As China’s central bank continues to print money at a breakneck pace, the country’s burgeoning love for cryptocurrency is poised to drive the digital asset market to unprecedented heights.
China and Crypto
With Hong Kong opening up to cryptocurrency and a long history as the world’s largest miner, it’s no surprise that China is viewed as a potential catalyst for the next crypto boom.
China’s crypto industry is making waves as the “China narrative” is used to sell the next bull market. Tokens that are China-related are performing incredibly well, with Conflux rising 467% during the last week, according to CoinGecko data. NEO is up 51%, and Filecoin (FIL) is up 60%.
Hong Kong’s Crypto Decision
Just a few days ago, we learned that Hong Kong’s Securities and Futures Commission (SFC) is starting a consultation process for licensing crypto exchanges to serve retail investors, after working on a consultation plan for accredited investors that goes live on June 1.
Stablecoins are also set to be regulated in the city using locally incorporated institutions and trusts. This announcement fueled expectations of an Asia-led crypto boom, after Bloomberg reported that China’s mainland government in Beijing could have quietly endorsed the idea.
Retail trading of cryptocurrencies is currently banned in Hong Kong. However, the announcement that the special administrative region of China was dipping its toes back into crypto immediately set off bullish reactions from everyday users and executives alike.
Moreover, both Gate.io and Huobi Global crypto exchanges have stated that they will apply for crypto exchange licenses in Hong Kong and comply with the relevant regulations to offer services to Hong Kong clients. Crypto users and stakeholders alike have until March 31 to partake in the SFC consultation.
Hong Kong To Replace U.S.A?
On the other hand, U.S. regulators are cracking down on Bitcoin, Ethereum, cryptocurrencies, and crypto companies following the FTX collapse last year, which sent shockwaves through the crypto market.
CEO of Coinbase, Brian Armstrong, warned that without clear legislation on cryptocurrencies and a friendly atmosphere from authorities, the United States could lose its place as a financial hub in the long run.
In addition, he said, crypto is available to everyone around the globe, with the European Union (EU), the United Kingdom (UK), and Hong Kong (HK) currently setting the pace and having the potential to get ahead of the U.S.
Hong Kong to Legalize Retail Crypto Trading: China Endorses City’s Crypto Hub Ambitions
The Securities and Futures Commission (SFC) of Hong Kong announced its latest policy proposal to allow retail investors to buy big-cap cryptocurrency tokens such as bitcoin and Ether on licensed virtual-asset platforms. The new cryptocurrency regulatory regime will come into effect on June 1, 2023, and can only offer “eligible large-cap virtual assets” to retail investors.
Eligible Large-Cap Virtual Assets for Retail Investors
The SFC defines eligible large-cap virtual assets as tokens that are included in at least two acceptable indices issued by at least two independent index providers. The SFC policy proposal aims to provide regulatory oversight and investor protections to once vibrant but unregulated cryptocurrency investment activities.
Consultation Period for Policy Ends on March 31
The consultation period for the policy proposal will end on March 31. During this period, exchanges can determine what cryptocurrency tokens retail investors can trade and how much they can invest. Platforms will also need to consider a range of general factors, such as a virtual asset’s management team, maturity, and liquidity, and the security infrastructure of its blockchain protocol, before offering these tokens to investors.
Regulatory Oversight for Effective Regulation
The SFC emphasizes the need for effective regulation, stating that collapses in the past year “resulted in substantial losses to tens of millions of investors.” The watchdog also highlighted the exposure risks arising from the “increasing interconnectedness” between the virtual-asset market and the traditional financial system.
Platforms to Conduct Knowledge Assessments on Investors
Under the new regime, platforms will need to conduct knowledge assessments on investors before serving them and set exposure limits for customers depending on their financial situations. They will also set up token admission and review committees responsible for following through with the SFC’s admission criteria and making final decisions on whether to admit, halt, suspend or withdraw offerings.
Hong Kong’s Push to Emerge as a Virtual-Asset Hub
Hong Kong has recently made a significant push to emerge as a virtual-asset hub, with policies unveiled last year legalizing retail access to cryptocurrency trading. In December, the city passed the Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022, which officially introduced the new virtual-asset platform licensing regime. After June 1, unlicensed cryptocurrency trading activity will be a criminal offense, the SFC said.
Huobi Hong Kong for High net worth individuals
Justin Sun’s crypto exchange Huobi Global is applying for a crypto trading license in Hong Kong and is launching a new trading venue there, Sun said on Twitter on Monday. The new exchange, called Huobi Hong Kong, will focus on institutional investors and high-net-worth individuals, he said.
Crypto-Linked Stocks Rally
Chinese crypto- and blockchain-linked stocks rallied Tuesday. Digital asset firm OKG Technology Holdings Ltd. jumped as much as 22% in Hong Kong. Crypto platform operator New Huo Technology Holdings Ltd. advanced as much as 12%. In mainland China, software specialist Shenzhen Forms Syntron Information Co. at one point added 10%.
China Endorses Hong Kong’s push to become a crypto hub
As Hong Kong moves towards legalizing retail crypto trading, officials from China’s Liaison Office have been showing support for the idea by attending crypto gatherings in Hong Kong and making follow-up calls to certain projects. The move is seen as an endorsement of Hong Kong’s push to become a crypto hub, as the territory uses its separate legal system and markets to be a testing ground, much like it was for China’s first test of open markets in the 20th century.
The SFC’s consultation paper comes as governments around the world start to rein in the freewheeling cryptocurrency market following a series of meltdowns last year, including that at FTX, previously the world’s second-largest cryptocurrency exchange. Hong Kong’s stance has drawn the attention of cryptocurrency firms based in the United States, where recent crackdowns have triggered an industry outcry.
Next Crypto Bull Market
Coinbase CEO Brian Armstrong said on Twitter last week that the US risked losing its status as a financial hub to jurisdictions such as Hong Kong, while Gemini co-founder Cameron Winklevoss wrote on Twitter that cryptocurrencies’ “next bull run is going to start in the East.”
China To Welcome Crypto Adoption – Predicts Tron Founder Justin Sun
The People’s Republic of China has been very hostile towards the crypto market in the past decade ranging from the miners’ ban to the crypto trading ban. However, Justin Sun – the Permanent Representative of Grenada to the WTO and the founder of Tron Foundation – has insisted that crypto adoption in China is imminent with the recent implementation of transactions’ tax. Notably, China has implemented a 20 percent personal income tax on all crypto profits.
According to Sun, China’s global influence on other worldwide economies may push the to move in a similar direction in future.
“The crypto tax in China is a positive development for the global cryptocurrency market and may set a precedent for other countries to follow,” he noted.
He added that the Tron ecosystem and Huobi crypto exchange have a strong focus on innovation and have been instrumental in driving the growth and development of blockchain technology in China
Bigger Picture of China Crypto Adoption
The global crypto market is expected to significantly benefit from China providing clear regulations amid a time when accountability is needed to ensure mainstream adoption. Furthermore, the FTX and Alameda saga, which has been described as the fastest big corporate failure in American history, triggered a global crypto regulatory need.
China has been easing Covid related restrictions following a string of lockdowns in major cities. As the country rejoins the world’s supply chain, the use of cryptocurrency is expected to widen the country’s economic outlook. Furthermore, the country has tested and rolled out its CBDC, digital yuan, in the past few years.
More crypto regulations in China will help onboard mainstream organizations like traditional banks in the country that needs digital assets exposure. Furthermore, the high inflation has caused traditional organizations to adopt Bitcoin and digital assets as hedge factors.
China Floats The Idea Of “Asian Yuan” To Reduce Dependency On USD
The post China Floats The Idea Of “Asian Yuan” To Reduce Dependency On USD appeared first on Coinpedia Fintech News
The opinions of researchers Song Shuang, Liu Dongmin, and Zhou Xuezhi from the Chinese Academy of Social Sciences (CASS) were published in a September edition of the World Affairs journal, which suggested the introduction of an Asian yuan token would reduce Asia’s dependency on the USD.
The researchers stated that distributed ledger technology (DLT) would form the underpinning of the Asian token, which would be tethered to a bundle of 13 currencies, akin to similar existing and trialed central bank digital currencies (CBDCs).
According to the experts, the currencies would comprise those of all ten ASEAN (Association of Southeast Asian Nations) member countries, as well as the yuan of China, the won of South Korea, and the yen of Japan.