July 30, 2021 / Interesting

Will Binance Scam? Regulators Pressure And Future Of Cryptoexchange


Today Binance is the TOP-1 platform over the world, but about a month ago, the crypto exchange started having serious problems with regulators, which it cannot yet solve.

The authorities in the UK, Canada, Japan, Italy, Malta, and other countries want to see the Binance license, which, as it turned out, does not exist. And banks and payment networks block the sending of fiat to the exchange.

The website itself imposed restrictions on trading Bitcoin and other cryptocurrencies, also significantly reduced the withdrawal limits, and talks began about changing Changpeng Zhao as CEO.


Binance has the most traffic, the highest trading volumes, their token is in the TOP-4 of the best cryptocurrencies. This is all really and easily verified.

But behind all these achievements, we forgot about one important point. Where is Binance exchange located? We are not the first to ask this question, but so far no one has found an answer to it, they are not in China, not in Hong Kong, not in Malta, etc. It seems to be like a platform actively cooperating with the authorities of various countries, helping them catch fraudsters, opening fiat gateways for the convenience of citizens. But in which country is their headquarters?

So the regulators asked this question and began to warn citizens that, it turns out, there is an exchange in the country and provides services, but at the same time it has never received a license. The story began to gain traction late last month, when the Japanese regulator issued a warning to Binance for operating in the country without a license, which they were required to obtain back in 2018. To which the representatives of the exchange threw up their hands, they say, we do not work in Japan at all, why do we need a license.

Further, the Canadian province of Ontario announced that it was impossible for Binance to continue working in the region due to the lack of an appropriate license. Here, the site did not answer anything, it just stopped working and asked customers to withdraw funds.

Further, claims appeared in the UK, they banned the operation of a subsidiary of Binance Markets Limited and, under this pretext, indicated the need for the site to completely cease operations in the United Kingdom. The exchange weathered the blow and decided not to leave the country, saying the ban only affects one unit that does not provide services through their main site.

But the banks sided with the authorities. So, Barclays forbade its clients to send money to the exchange:

Then there was a ban from another major bank, Santander, no payments on Binance. Then the Clear Junction payment system and another large bank NatWest joined the restrictions. It is also known that several cryptocurrency funds have decided not to work with Binance anymore, because regulators are increasingly complaining about the exchange. And in fairness, it should be noted that such payment giants as Visa and Mastercard announced that they work with the exchange and they have no problems.

But it’s not just Japan, the UK and Canada that are unhappy with Binance’s actions. The authorities of Thailand, the Cayman Islands, Poland, Italy, Hong Kong and Malta warned about the risks of working on the exchange. In the latter country, the site was generally sued for promising to pay donations to the cancer fight fund, but since the process of obtaining a license was stalled, they did not pay anything, moreover, they intend to withdraw assets outside Malta.

All of the above happened within one month.


It seems to us that this is more of a planned attack by regulators in order to take control of all cryptoexchanges. If you force the leading platform to cooperate, then the rest will not even utter a word.

Another large and relatively young crypto exchange FTX bought back its shares from Binance under the pretext of business necessity. And the Gemini platform generally stated that in the future they will become the market leader. That is, colleagues in the shop are not in a hurry to support Binance, on the contrary, they will try to benefit from this.

Now about the exchange itself, they started cheerfully and made a statement about how they intend to resolve the issue. There are three main points. The first is an increase in compliance staff by 500%, most likely to prevent illegal money from entering the site. Next comes the implementation of hardware solutions that are recommended by an international organization to combat money laundering. And the third key point is action within the legal framework of specific countries. Why, then, these countries declare that they have no work permits, it is not clear, perhaps the exchange has just now decided to deal with this issue.

Due to so-called unforeseen circumstances, the acceptance of payments in euros through the SEPA payment network was stopped. It is noteworthy that this is already a decision of the exchange itself; for some unknown reason, they decided to close this financial channel.

The next solution is a complete refusal to trade tokenized shares. Clients were given 90 days to sell assets. As representatives of the exchange explained, no one forced them to do this, they just decided to develop their business in a different direction. Although, if you delve into recent history, then back in early May, the German financial regulator issued a warning to Binance for tokenized shares. Interestingly, other exchanges with the same partners continue to trade tokenized shares and no one has any questions about them.

Then we get to an extremely interesting statement from the head of Binance, Changpeng Zhao, that he is looking for a successor and is ready to give up the post of CEO to someone who can solve problems with regulators. It is a noble matter, but why immediately take and leave the post of general, you can give such a superman just the place of some kind of deputy director. If you build a conspiracy theory, an idea comes to mind, maybe Changpeng Zhao is looking for a way to retire, as if he had nothing to do with in case of even bigger problems. He also talked about plans to conduct an IPO of the American division of Binance.

Such legalization can remove many of the regulatory issues. But it still needs to be passed, and so far, apart from words, we have not heard of any actions in this direction.

Is It Time To Get Down?

Do I need to blame Binance? See for yourself, first we lowered the leverage from 100 to 20.

Margin trading is a risky business, but nevertheless, many people appreciated the exchange precisely for this opportunity.

The next step is to reduce the limit on withdrawals without verification from 2 to 0.06 BTC per day.

For new users, this rule begins to operate right now, and for experienced traders it will be introduced gradually. Here it is necessary to clarify that there is no mandatory verification on the exchange, you can create an account simply by entering your email address. But then you will be limited in withdrawal limits and now they have been cut in fact three times. But if you want to be able to shoot up to 100 BTC every day, then send photos, shoot videos, confirm income and other delights of verification.

And the third important news is that now all Binance users can pay taxes and sleep peacefully. An application has been launched on the site that will help a trader calculate the amount of tax deductions depending on his activity on the exchange, success in trading and legislation in the country at his place of residence.

If the exchange was able to launch such a tool, then it probably knows how to collect all the data about its customers and, if necessary, send it directly to the tax office. In addition, in light of recent events, Binance is clearly ready to go to any lengths to resolve problems with the authorities.

In total, we have no direct evidence that the exchange will be scammed. But events around her are unfolding rapidly, and many have a double meaning, which arouses suspicion.

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