The world’s largest crypto exchange kept weak know-your-customer (KYC) checks and did not properly cooperate with authorities, despite its public promises about compliance, Reuters said in an investigative report published Friday. The report was based on interviews with dozens of former employees of Binance, advisers and business partners, as well as the review of hundreds of documents.
- According to the report, Binance has refused to answer regulators and partners’ questions about its operations, turned down German police’s requests to help track down fraudsters and terrorists, and ignored its compliance advisors’ recommendations to avoid customers in countries with money laundering risk, all while publicly claiming to welcome regulation.
- Binace CEO Changpeng “CZ” Zhao also ignored senior staff when they voiced concerns about weak know-your-customer requirements, the report said.
- The crypto exchange has received multiple warnings about its operations from regulators around the world about its activities, including Singapore, Japan, the Cayman Islands, and the U.K., while avoiding setting up global headquarters.
- According to Reuters, in 2020, Binance acted against its own money laundering risk alerts for at least seven countries. Specifically, the ratings for Russia and Ukraine were “manually” downgraded from “extreme” to “high”, such that the exchange could continue offering services there, according to Reuters.
- Apart from the sector-wide crackdown in China in 2017, the exchange has twice fled markets once its relationship with regulators turned sour, Reuters said. Once this occurred after Japan called Binance out for offering services without being licensed, and another time when it realized being licensed in Malta to set up global headquarters involved more than a rubber stamp, Reuters wrote.
- Binance has refuted the claims in the Reuters report.