Binance evidently hid substantial links to China for several years despite public statements that the crypto exchange left the country in late 2017, according to internal company documents seen by the Financial Times. Founder and CEO Changpeng Zhao (CZ) and other executives repeatedly instructed Binance employees to hide the company’s Chinese presence. This included an office in use until at least the end of 2019. The FT revelation is not really a surprise.
“We no longer publish our office addresses . . . people in China can directly say that our office is not in China,” CZ allegedly said in a company messaging group in November 2017, seen by the FT.
In public statements, CZ had said most of Binance’s employees, except “a small number of customer service agents,” left China after 2017 when the country intensified its crackdown on crypto. The U.S. CFTC sued the exchange on Monday over allegations that it had illegally served U.S. clients. The CFTC also alleged that Binance intentionally failed to disclose the location of its executive offices and that statements that its headquarters was wherever CZ was located reflected “a deliberate approach to attempt to avoid regulation.”
In late 2019, employees at the company discussed a media report that claimed Binance was opening an office in Beijing. “Reminder: publicly, we have offices in Malta, Singapore, and Uganda,” one message said. “Please do not confirm any offices anywhere else, including China.” Binance told the Financial Times: “It is unfortunate that anonymous sources are citing ancient history (in crypto terms) and dramatically mischaracterising events. This is not an accurate picture of Binance’s operations.”
CZ was born in China but moved to Canada as a child. Thus, he holds Canadian citizenship. The CFTC’s lawsuit comes as Binance’s U.S. affiliate, Binance.US, faces scrutiny in Washington over its proposed $1 billion purchase of assets belonging to the bankrupt U.S. crypto lender Voyager Digital.
The acquisition is being reviewed by the Committee on Foreign Investment in the United States (Cfius). To the extent the Chinese government seeks to influence in crypto finance, Cfius will have concerns over any deal that traces back to China,” said one former Cfius official.
Binance said that Binance.US, allegedly controlled by CZ, licenses the technology of its parent but is an operationally independent entity. However, links between the two exist, including with CZ himself, Binance.US’s ultimate beneficial owner. Binance has done quite some work to disguise its Chinese presence through virtual private networks and software that masks the location of the user to gain access to a service.
The CFTC lawsuit also alleged that Binance instructed US customers to use VPNs to obscure their location. Binance said it did not operate in China, nor did it have any technology, including servers or data, in the country.
