A Financial Times report recently unveiled Binance’s concealed connections to China. This report contradicts the crypto exchange’s claims of leaving the country after the 2017 crackdown. Binance CEO Changpeng Zhao (CZ) and other senior executives are being accused of hiding these ties. They allegedly instructed employees to hide the company’s presence in China. This included an office that remained operational until late 2019. Not only that, but the report reveals an alleged Chinese bank used to pay employees’ salaries.
JUST IN: 🇨🇳 #Binance hid substantial links to China for several years, FT reports.
— Watcher.Guru (@WatcherGuru) March 29, 2023
The FT findings have added to the current FUD around Binance, with the exchange currently being accused of violating US regulations. CZ continuously defended his statements that most of his employees left China after 2017. However, the report claims that Binance intentionally failed to disclose its executive offices’ location. Regulators see this as an attempt to avoid regulation. Internal communications between Binance and its Chinese employee shows that Binance executives advised their employees to “hide” offices in China. In response to these claims, Binance states that this is “ancient history.” This implies that Binance is focused on the future and the current accusations are purely against Binance’s operations, not its Chinese ties.
CZ Binance still denies Binance’s ties to China. While the leaked communications show otherwise, there exists a chance that they were taken out of context.
Binance’s Chinese Ties Allegedly Go Deep
According to the FT report, Binance employees were being paid through a bank in Shanghai. Even two years after Binance allegedly left China, payroll employees took part in a tax session in China. This leads us to believe that Binance executives have something to hide, one way or the other. In the same year, Binance hired data analysts and clearing specialists in China. The report shows that the company also used virtual private networks (VPNs) to hide its presence in China.
Because of these actions and the current issue with TikTok which is not related to crypto whatsoever, congress approved the new S686 bill. The so-called “Tiktok” bill gives a minimum of a 20-year sentence and a $250,000 fine for using a VPN to access banned applications in the United States. This new bill will target everyone who uses such private networks to access banned apps illegally.
BREAKING: New S686 bill gives you minimum 20 year sentence and $250,000 fine for using a VPN to access “banned apps” in the US.
— whalechart (@WhaleChart) March 29, 2023
The CFTC lawsuit goes deeper as well, claiming that Binance advised its US customers to use VPNs as well. If this is true, Binance and CZ specifically could take a huge hit in court. A former employee of Binance also claims that most of the key developers remained and operated from China. Binance responded quickly after, stating that it does not have any technology in China, including servers or data storage.
The United States, China, and Binance’s Affiliation
Given the geopolitical context, the CFTC and US authorities won’t let go of these ties easily. If Binance has links to China in any way whatsoever, it could mean the exchange is going to be targeted heavily. Again, Binance keeps emphasizing that no government, including the Chinese government, has any access to Binance data. This is not true when responding to lawful and legitimate law enforcement requests, however. The Committee on Foreign Investment in the United States (CFIUS) is currently reviewing most Binance deals, including the Binance US deal to acquire Voyager Digital.