(Adds Binance response in paragraph 8)
March 5 (Reuters) - Binance, one of the world's largest
cryptocurrency exchanges, developed a plan to avoid the threat
of prosecution by U.S. authorities as it started an American
entity in 2019, the Wall Street Journal reported on Sunday.
Any lawsuit from U.S. regulators, who had signaled a coming
crackdown on unregulated offshore crypto players, would be like
"nuclear fall out" for Binance's business and its officers, the
WSJ said, citing a Binance executive's warning to colleagues in
a 2019 private chat.
The report is based on messages and documents from 2018 to
2020 reviewed by The Wall Street Journal as well as interviews
with former employees.
Binance, founded in 2017, and Binance.US are more
intertwined than the companies have disclosed, mixing staff and
finances, and sharing an affiliated entity that bought and sold
cryptocurrencies, the report said.
It noted that Binance.com operated mainly from hubs in China
and Japan, yet a fifth of its customers were based in the United
States. Binance.US is based in San Francisco.
Binance developers in China maintained the software code
that supported Binance.US users' digital wallets, potentially
giving Binance access to U.S. customer data, the WSJ reported.
Since 2020, the Department of Justice and Securities and
Exchange Commission have been investigating Binance's
relationship to Binance.US, the report said, citing subpoenas
and people familiar with the matter. If U.S. regulators
determine that Binance has control over its U.S. entity, they
could claim the power to police Binance's entire business.
In an emailed statement to Reuters, a Binance spokesperson
said, "we have already acknowledged that we did not have
adequate compliance and controls in place during those early
years...we are a very different company today when it comes to
compliance."
Binance.US, the SEC and DOJ did not immediately respond to
Reuters' requests for comment.
Binance is under heightened scrutiny as three U.S. senators
this week asked the giant cryptocurrency exchange and Binance.US
for information about their regulatory compliance and finances.
Reuters has reported that Binance.US was created as a de
facto subsidiary in 2019 to draw the scrutiny of U.S. regulators
away from Binance.com.
(Reporting by Akriti Sharma in Bengaluru; Editing by Richard
Chang and Diane Craft)
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.