Is Binance Trying To Duck U.S. Regulations?

October 30, 2020 01:00 PM
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Yesterday, Forbes released a 'hit piece' on Binance, claiming they had seen a presentation that outlined the exchange's plans to evade U.S. regulation. It is impossible to form a specific opinion without verifying the actual document cited. That said, it brings up whether some tactics used by the firm will effectively insulate them from enforcement action.

The article paints Binance as scheming to sidestep U.S. regulation while still participating in the market via the firm's Binance U.S. entity. The presentation, which is not displayed and only referenced, is said to have been received from an ex-Binance employee. The former employee was effectively acknowledged by CEO Changpeng Zhao (CZ) in a Twitter thread where he denied the presentation's contents. He also states that even if a similar presentation existed, it does not necessitate that Binance took the recommendations or did something wrong.

In referring to the presentation as the 'Tai Chi' document, the article says the company discussed using different corporate entities with loose ownership structures to obfuscate the relationship between Binance, Binance U.S., and other associated entities.

The tone of the piece is quite ridiculous. The Forbes writer asks us to trust their recount of the slide show while only showing one, relatively benign slide. Furthermore, a presentation where Binance considers how it can appear to be/be regulatory compliant as a foreign entity in an unclear regulatory environment like crypto is not at all necessarily nefarious as the article intends to project.

Forbes has a mixed reputation with its crypto coverage. To maintain the volume of articles at a modest cost, our understanding is that their writer-base is entirely freelance and does not come with the usual checks and balances of the publication's other work. All that said, as seen by the launch of Binance U.S., the firm is clearly trying to find a way to service the U.S. while having core operations be unregulated.

The question is now, in light of the BitMEX charges, whether some of the tactics/approaches Binance has taken to ring-fence their U.S. operations will do anything in the eyes of regulators to avoid a similar fate.

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