Binance CEO claims US branch was NOT set up to evade regulations

October 30, 2020
By Sam Grant

Changpeng Zhao hits back after serious allegations were made against the exchange, in particular, its US arm

Following allegations made against the exchange, the CEO of Binance, Changpeng Zhao has struck back saying that the exchange didn’t establish the US arm with intentions of skirting enforcement. Zhao also asserted that there were no profit motives behind the move either.

“Binance has always operated within the boundaries of the law,” he said.

The allegations surfaced when Forbes reporter Michael Del Castillo wrote a detailed piece stating that there were questionable reasons behind the exchange setting its US arm. The article was posted yesterday and Forbes claims to have a leaked presentation spelling out Binance’s plans in the US.

The document outlines that before launching Binance US two years ago, the exchange was looking to institute a Tai Chi entity in the country to serve as a shield. The entity would protect the primary operations of the exchange from regulation.

“While the then-unnamed entity set up operations in the United States to distract regulators with feigned interest in compliance, measures would be put in place to move revenue in the form of licensing fees and more to the parent company, Binance. All the while, potential customers would be taught how to evade geographic restrictions while technological work-arounds were put in place,” explained Castillo in the article.

Forbes didn’t reveal the identity of the source of the leaked document. However, the news outlet said that the document was created by Harry Zhou. Zhou, formerly of Binance, is the co-creator of an exchange Koi Trading based in California. The outlet reported that the document was presented to Zhao in the last quarter of 2018 by Jared Gross – the exchange’s mergers and acquisitions manager.

About an hour after the piece was published, Changpeng Zhao hit back to clear the exchange’s name. Zhao impugned most of the allegations asserting that the leaked presentation was not produced by an employee at the exchange.

He pointed out that Binance has a good relationship with several law enforcement agencies. Zhao added that the firm had set up many exchanges in different countries, which is proof that it has no issues complying with regulations.