In Brief
- Binance, grappling with regulatory scrutiny and executive departures, makes inroads into the Indian market by enabling crypto transactions in rupees.
- The company's novel strategy is attracting Indian traders, but also raising concerns with local regulators regarding potential breaches of AML rules.
- Binance's CEO, Changpeng Zhao, has downplayed staff turnover, maintaining that Binance is evolving with the ever-changing crypto landscape.
Binance, the world’s largest crypto exchange by trading volume, has been in the spotlight recently, not only for the high-profile departures of several top executives and staff cuts but also for its apparent business in India.
Amid the prevailing Fear, Uncertainty, and Doubt (FUD) over its regulatory compliance, Binance has been carving a niche for itself in the Indian market. It is attracting traders by enabling crypto transactions using the local currency, but regulators have yet to comment officially on it.
Is Binance Operating Illegally in India?
A recent report revealed that Binance provides a platform for Indian traders to exchange cryptos for rupees. Acting as an escrow, the crypto exchange is holding user’s digital assets until the buyer and seller agree on a trade and the money has been moved.
“Someone can sell crypto from a wallet opened with Binance. No one gets to know. No tax is paid, but trading goes on. Some of the trades are quite large,” said an anonymous trader.
This approach allows the settlement of transactions in rupees, effectively bridging local and offshore traders.
However, this strategy has attracted the attention of the Reserve Bank of India (RBI). Regulators are now evaluating if local traders could be breaching rules on foreign exchange and money laundering.
Despite the regulatory concerns, Indian crypto enthusiasts seem to be flocking to Binance. Amid the stifling environment caused by high taxes and fear of backlash from the RBI, local traders find Binance’s rupee-denominated trades an appealing alternative.
Top Executives Leave Binance
Binance faces increased scrutiny from law enforcement agencies, notably the United States Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). The company and its CEO, Changpeng Zhao, are under investigation for allegedly failing to implement controls to prevent money laundering.
Furthermore, Binance’s troubles have been amplified by the exit of several key executives. These include the general counsel, head of investigations, chief strategy officer, and a senior vice president for compliance.
Zhao, however, dismissed the departures as a regular part of business operations.
In a public statement, Zhao recognized the turnover but argued that it was due to changes in markets. He underscored that such turnover occurs at every company and acknowledged the significant contributions of former team members.
“As an organization that has grown from 30 to 8000 people in 6 years, from 0 to the world’s largest crypto exchange in less than 5 months from founding (and HELD ON to that position ever since), we have been able to protect our users at all times and we have been extremely lucky to have some of the best talent the planet has to offer,” said Zhao.
Disclaimer
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