It was a report with some explosive power. Bloomberg and subsequently several other media outlets had reported that the Commodity Futures Trading Commission (CFTC), the US regulator for derivatives trading, had launched an investigation against the world’s largest crypto exchange. Bloomberg relied on unnamed but well-informed sources.
Does Binance allow US citizens to trade on its crypto exchange without permission?
The alleged allegation is that Binance is said to have also enabled US users to trade on the platform. That would contradict the legal regulations in the USA, which is why the crypto exchange has a number of technical measures in place to prevent users from the United States from being able to log on to the platform at all.
In a question and answer session on the new social audio platform Clubhouse, Binance boss CZ described the report as a “baseless” and alleged product of “self-proclaimed competitors” who would try to target journalists with dubious allegations to move to negative reporting about Binance.
He is not aware of any ongoing investigations. He also does not see what this should be based on. After all, he thinks a routine check is possible, as is carried out by many authorities around the world from time to time. However, no allegations have been made so far.
Binance boss refers to strict measures, which, however, have to be constantly improved
CZ also pointed out that Binance “has probably taken the strictest measures to comply with KYC and AML” that exist in the competition. KYC means “Know Your Customer” and conceptually bundles measures to identify the customers of a platform. AML means “Anti Money Laundering” and conceptually bundles measures to combat money laundering. In short, CZ is not aware of any guilt.
What he admits, however, is that there are always US citizens who start with “intelligent “Methods would try to circumvent their exclusion from Binance. The platform has to be constantly readjusted here. On the other hand, the geofencing rules used are already so strict that people are falsely blocked when they enter the USA as tourists.
Binance’s compliance is judged differently
Recently, Binance had hired ex-US Senator Max Baucus to come and see it to get advice from him on matters of compliance. It was also intended to promote an improvement in relations with American politics. According to Baucus, Binance is currently investigating whether it wants to be fully licensed by the CFTC. Regardless of this, in his opinion, the exchange is already complying with all legal rules, Baucus told Bloomberg.
Competitor Coinbase sees this less clearly. In the documentation for the IPO, Coinbase expressly points out in the presentation of its corporate risks that one has to compete with companies that represent “variable compliance with regulatory provisions” – specifically named: Binance.