Binance, the world’s largest digital-currency exchange, quickly ran into a problem in 2017. Operating from hubs in China and Japan, the exchange had a fifth of its customers in the U.S., where authorities signaled a coming crackdown on unregulated offshore crypto players. Any lawsuit from U.S. regulators would be like “nuclear fallout.”
Binance was worried about the threat of prosecution from U.S. authorities in 2018-2020. To avoid this, they devised a plan to create a separate platform, Binance.US. This would license Binance’s technology and brand, but would be seen as a separate entity to avoid U.S. regulators. This would allow Binance to continue to operate without issue.
Binance and Binance.US have been much more intertwined than either company has disclosed, with staff and finances mixing and an affiliated entity buying and selling cryptocurrencies, according to interviews and the messages and documents reviewed by the Journal.
This raises questions about just how separate Binance.US really is from Binance – and whether Binance has access to any U.S. customer data.
What if U.S. regulators determine that Binance’s links to a U.S. company give them the power to police Binance’s entire business? This would put Binance’s founder and CEO Changpeng Zhao under closer scrutiny, as well as his finances. Recently, a Texas financial regulator claimed that Binance.US didn’t get a license to operate in the state because it refused to provide financial information about its parent company.