This year, it has been a rough ride for Binance, constantly making headlines with lawsuits, withdrawals of services and senior executives resigning from the company. Is this a coincidence or is there something happening behind the scenes?

In the latest development, Binance is no longer providing its cryptocurrency Visa debit card in Europe, and the companies it partnered with are also pulling out. It is no surprise that companies are distancing themselves from the cryptocurrency giant amid ongoing lawsuits.

While the company’s Co-founder and CEO, Changpeng Zhao (CZ), advocates the importance of being transparent, has he genuinely been forthright about his actions? Or is he striving to evoke sympathy, giving the impression of innocence and transparency, all the while concealing something undisclosed?

Here’s a brief breakdown of what happened to Binance across the world.

China

2013 - 2017: In 2013, the nation directed third-party payment providers to cease employing bitcoin. Chinese officials halted token sales in 2017 and vowed to persist in their scrutiny of crypto exchanges in 2019.

24 September 2021: 10 government authorities, including the People's Bank of China, released a notice stating that cryptocurrency is not recognised as legal tender. All cryptocurrency transactions within China are deemed unlawful, including offshore exchanges offering services to Chinese residents.

Singapore

13 Feb 2022: Binance pulled out of Singapore and shutted down its operations in the financial hub.

Canada

13 May 2023: Binance announced exit from Canada

UK

30 May 2023: Binance Markets Limited requested to cancel its FCA permissions, which were officially terminated on 30 May 2023, as recorded in the FCA Register.

Belgium

13 June 2023:Belgium's markets regulator ordered Binance to halt offering crypto services.

Cyrus

14 June 2023: Binance de-registered from Cyprus to focus on larger EU markets due to regulatory pressure.

Netherlands

16 June 2023:Binance announced its departure from the Dutch market and made changes to its services in the Netherlands.

Austria

26 June 2023: Binance withdrew licence application in Austria

Russia

27 September 2023: Binance announced exit from Russia and sold its Russia business to CommEX

France

18 Oct 2023:Executive director of Binance France resigned, marking the tenth senior executive departure from Binance this year.

US

Binance's General Counsel, Chief Strategy Officer, and Senior Vice President for Compliance have resigned amid legal troubles for the company and its CEO. In addition, Binance dismissed numerous employees, with some not providing reasons for their departure, while others were informed of their redundancy. The exchange had plans to reduce its U.S.-based workforce.

Globally

Binance lost $790 million in 24 hours as investors moved assets after SEC lawsuit on 5 June 2023.

Despite Binance pulling out of multiple countries and dealing with legal challenges, it appears the company remains largely unaffected. What could be the reason for this?

Binance’s Biggest Market: China

Based on the data, it appears that withdrawals of businesses and services may not significantly affect Binance, as the company's biggest market is in China. (Image Source: The Wall Street Journal)

Binance was expected to distance itself from China after the country banned cryptocurrency trading in 2021. However, almost two years later, cryptocurrency-related assets worth $90 billion were traded in China within a single month, as seen on the data above. This makes China the dominant market for Binance, accounting for 20% of global trading volume (excluding large traders). Internally, the significance of China for Binance is acknowledged, and despite the ban, the exchange's investigations team collaborates with Chinese law enforcement to identify potential criminal activities among its 900,000+ active users in the country.

Operations in China Continues Despite Cryptocurrency Ban

China expanded its crackdown on crypto in 2021, declaring all crypto-related transactions illegal. Despite this, the Chinese crypto market continues to thrive. Binance has sought innovative ways to serve Chinese users, including residency programs and VPNs for trading on banned exchanges.

Binance's undisclosed operations in China shed light on how the crypto giant manages to function in unwelcome territories. The exchange assisted Chinese users in bypassing restrictions by guiding them to visit websites with Chinese domain names before redirecting them to the global platform. This strategy was detailed in an internal document, circulated before China's 2021 crypto ban. Despite China's central bank imposing the ban, it remains silent on the matter.

Using Binance in China

Within Binance's official Chinese chatrooms, Binance employees and Binance-trained volunteers, known as Binance Angels, were seen sharing techniques with users to circumvent Binance's KYC and verification systems. These methods include forging bank documents and providing false addresses.

According to CNBC who have reviewed all the messages in Binance's Discord channel and Telegram groups from 2021 to 2023, Binance Angels frequently assist Chinese users with the registration process.

In May 2022, on Binance's Discord channel, a user inquired about how Chinese users could register. A Binance staff member responded (with user roles such as "angel" and "community volunteer", as shown in the image below) that they could use a VPN to bypass restrictions and register with an overseas email as a "Taiwan resident" before switching their nationality back to Chinese.

Screenshot of the user’s inquiry on Binance’s Discord channel. (Source: Web3+)

Another screenshot of the user’s inquiry on Binance’s Discord channel. (Source: ABMedia)

In December 2022, Stella, identified as the Binance community manager, shared instructions on how to download an app tailored for mainland Chinese users. This app allowed users to access Binance services without needing a VPN.

CNBC received the app link from an email with a binance.com domain. A reporter successfully downloaded the app in China without a VPN, using a Chinese phone number for registration. The app is hosted on Tencent and enables cryptocurrency trading in Chinese yuan, integrating popular Chinese apps like WeChat and Alipay. It also provides options for Chinese KYC verification.

Leniency Leads to Security Concerns

The technicalities shared with customers also raise concerns about the effectiveness of Binance's anti-money laundering efforts. For international companies like Binance, Know Your Customer (KYC) and anti-money laundering (AML) efforts are crucial in ensuring that customers are not involved in illegal activities such as terrorism or fraud.

Duke University professor and former FDIC Chief Innovation Officer, Sultan Meghji, worries about Binance's leniency in enforcing KYC guidelines beyond China. He emphasised the national security implications, expressing concerns about how individuals like terrorists, criminals, money launderers, and cyber operatives from North Korea, Russian oligarchs, and more, could exploit these tactics to gain access to such infrastructure.

As experts predicted, which evidently happened in recent news, Israeli authorities have reportedly confiscated around 200 Binance accounts, which they believe have links to terrorist organisations since 2021. Notably, several of these accounts were connected to Palestinian firms associated with Hamas, according to Reuters. Binance has also proactively frozen all accounts tied to Hamas, and this action was to identify and confiscate accounts soliciting donations for the terrorist group.

Constant Denial About Operations in China

Reports suggest that Binance, under the leadership of CZ and other senior executives, instructed its staff to keep their operations in China discreet. This includes maintaining Chinese offices until late 2019, recruiting in Shanghai, and conducting transactions with a Chinese bank for payroll purposes.

Furthermore, Binance reportedly advised new Chinese employees to install VPNs on their devices to hide their locations.

However, the evidence provided by the Financial Times mostly pertains to pre-2020 events, and the media outlet acknowledges uncertainty about Binance's current status in China, citing a former employee who claims many key developers are still in the country.

Binance adamantly denies any ties to China, emphasising that the company does not operate there and possesses no technical assets, including servers or data, in China.

In summary, despite legal challenges and withdrawals from multiple countries, Binance remains a leading cryptocurrency exchange. As CZ advocates transparency, it undeniably triggers suspicions about how the exchange evaded Chinese authorities for so long. It raises questions about potential connections with government authorities. Also, what else has he been hiding?

While we hope Binance is safe for users' funds, it is important to be vigilant and do your own research to avoid heavy losses like those experienced by FTX users.