The Financial Times reported that Binance founder Zhao Changpeng and Dimplx formed the UK joint venture Binance Digital Limited in 2019, but relations between the partners have since soured. Dimplx said it intended to sue Binance and over disputes arising from their business dealings, but declined to provide details of its claims. Dimplx accused Binance of filing a “grossly inaccurate” annual report for one of the British entities associated with the world’s largest crypto exchange.
Binance Digital Limited was incorporated in the UK in November 2019 as a “payment processing facilitator”, according to its annual reports. It is 20% owned by Dimplx, a UK company created by two South Africa-based entrepreneurs. Binance founder and CEO Zhao Changpeng owns the remaining 80%.
The directors of Dimplx said the 2020 financial statements for one of Binance’s UK companies “do not accurately report” the nature of its business, its turnover, assets, and liabilities, “including potential tax liabilities.” According to the filings of Binance Digital, the company held roughly £100mn in “cash and/or bank balances” at the end of 2020, and that the same sum was owed to “creditors.”
The Dimplx directors said they believe that the £100mn represented balances held “on behalf of Binance Digital customers who had visited binance.com.” They said customers transacting on Binance.com would be “liable to pay transaction fees.” However, Dimplx said the financial statements recorded “zero turnover or fees in relation to any transactions conducted with any customer during the financial year.”
The UK Financial Conduct Authority (FCA) has repeatedly raised concerns about Binance. The regulator warned that its “complex and high-risk financial products [pose] a significant risk to consumers.” Last year, the FCA issued a consumer warning against Binance Markets Ltd, another UK entity of the Binance group, banning it from any regulated activities. The FCA later said Binance had failed to provide basic information about its global operations, such as “trading names and functions for all group entities globally.” The exchange has said it intends to repair relations with the FCA and reapply for UK supervision.
