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Binance Scheme to Avoid Regulators Revealed In Leaked Documents

On Thursday, Forbes reported a document obtained from the world’s biggest cryptocurrency exchange – Binance Holdings Limited. The document details an elaborate corporate plan designed to profit and intentionally deceive crypto investors from the U.S market, while also evading the country’s regulatory scrutiny. It is said that the document is anticipated to be created by Binance’s senior executives.

Binance, which recently launched the Venus DeFi platform in India, is presently responsible for around $10 billion in total crypto trades every day and its founder Changpeng Zhao “CZ” is one of the cryptocurrency billionaires.

The “Tai Chi entity”

According to the Forbes article, the 2018 document outlines an unnamed U.S company “Tai Chi entity” which would channel the profits to Binance through a network of corporations and distract regulators with a fake interest in compliance. While steps would be put in place to transfer profits in the form of licensing fees to the source company without revealing it to the financial regulator’s microscope.

When Forbes first reached out to the executives of the company, there was no response. But after the article was published by Forbes, CEO Changpeng “CZ” Zhao responded with multiple tweets asserting that Forbes’ reporting is bunk and claimed that, “Binance has always operated within the boundaries of the law.”

According to Forbes, US associated Binance.US is functioning under a corporate design corresponding to the “Tai Chi” network. US Chief executive Catherine Coley, who has been identified as having designed this document, declined to comment on Binance.US’s ownership.

In June 2019, Binance had revealed plans to release a US exchange which was registered with US Treasury Department’s Financial Crimes Enforcement Network (FinCEN). The next day, the exchange revised the terms of service and prohibited US users from gaining access to Binance’s global hub. 

“Strategic dealing of VPN use at Binance”

As per Forbes, the Tai Chi document explicitly calls for the “strategic” use of a virtual private network (VPN) to obscure trader’s locations as a way to sidestep the regulatory scrutiny by the Securities and Exchange Commission and New York State Department of Financial Services. Further alerts the employees of Binance against operating in the U.S to reduce “enforcement risks.” 

In addition to this, CZ has in many tweets supported the use of VPN, in June 2019 tweet, he stated VPNs are “a necessity, not optional.” Forbes additionally asserts the document has an “expounded strategy for diverting” US regulators. 

At first, Binance was based in Malta, but its headquarters location has been uncertain for the majority of the year. Changpeng Zhao has been quite secretive on the affairs of public appearances. 

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