China swears “zero tolerance” for commodity futures violations

0



Bloomberg

Ex-Trump official at Binance.US faces uproar over the company’s siblings

(Bloomberg) – The first challenge for the new Chief Executive Officer of Binance.US: tackling the perception that his company is merely a replacement for a crypto sister company under investigation by the US authorities. Brian Brooks, a controversial ex-banker regulator under President Donald Trump is launching a campaign to reassure regulators and others that his company is regulatory focus and is backed by his namesake Binance Holdings Ltd. is independent. Binance Holdings, the world’s largest cryptocurrency exchange, is currently under investigation by the judiciary, Bloomberg News reports that US officials have long been concerned that criminals are using crypto exchanges to hide illegal transactions and that customers on these platforms are taxing their trading profits bypass. San Francisco-based Binance.US, which is small but one of the fastest growing cryptocurrency exchanges in the country, is under attack from rivals who are all too eager to associate the US company with its contested namesake. A study by blockchain analytics firm Chainalysis Inc. concluded that Binance Holdings had more illicit finance-related transactions than any other exchange. “The challenge before me is to go to regulators and explain to them that we have an approach. It’s a very compliance approach, ”Brooks said in an interview. He plans to meet with the Commodity Futures Trading Commission and the Securities and Exchange Commission, among others, in the coming months. “We’re not a Binance alter ego,” said Brooks, who most recently served as acting head of the Treasury Department’s currency auditor’s office. During his tenure at the OCC, he sparked controversy over a rule that would have banned banks from withholding loans to industries such as arms manufacturers. He completed the move on his last day, which resonated with Republicans and Democrats, consumer groups and banks. The Biden government quickly stopped the new rule from coming into effect. In order to continue its exponential growth, Binance.US needs to ensure that U.S. regulators don’t restrict it due to issues with Binance Holdings. As a standalone company, the US company is allowed to do business in 43 states, with the exception of New York and Texas. In addition to securing these remaining licenses, Binance.US executives hope to one day convince regulators to allow crypto-linked derivatives in the U.S., the division that made Binance Holdings the giant it is today. All of these goals could become more difficult if the regulators crack down on them tough. Although Brooks says that Binance.US and Binance Holdings operate on market terms, the majority shareholder of Binance.US is Changpeng Zhao, who founded Binance Holdings in China in 2017. The Son of Chinese Educators The intern in Japan who emigrated to Canada began writing software for trading platforms. A spokeswoman for Binance Holdings said the company takes its legal obligations seriously but does not comment on specific matters or inquiries. Zhao said Binance Holdings is working with regulators around the world and further improving compliance. With Binance Holdings, investors can trade cryptocurrencies that are not available on other exchanges. It also enables trading in derivatives which investors can use to increase their bets with leverage. These features explain why the trading volume on Binance Holdings’ main exchange has quickly surpassed that of its competitors such as Coinbase Global Inc., based in San Francisco. Binance Holdings processed more than $ 50 billion worth of crypto trades in the 24 hours that ended at 2 p.m. ET, according to Coinmarketcap.com, an industry website, Coinbase has compared to more than 8.8 on Friday Billions of dollars in derivatives processed. Binance Holdings has also processed over $ 95 billion worth of derivatives that investors outside of the United States can use. Many exchanges, including Coinbase, don’t offer derivatives because they haven’t been approved to do so by U.S. regulators. By comparison, Binance.US processed approximately $ 1.9 billion in cryptocurrency transactions during that period, according to Coinmarketcap.com. Binance.US operates independently of Binance.com, the Binance Holdings exchange, and the US-based exchange only licenses the Binance name and some of its technology for a fee. Coinbase’s ProtestBinance.US is trying to keep its image intact in Washington, which preceded Brooks has already been under attack. Last year, its main US competitor Coinbase left the industry trading group Blockchain Association in protest after Binance.US was allowed to join. A Coinbase executive wrote in a resignation letter: “The past few weeks have shown us that the Blockchain Association is not interested in the membership criteria that we have been working on to underpin this organization’s mission.” Before listing at $ 86 billion -Dollar, Coinbase A filing with the SEC states that it is competing with companies that “adhere to regulations to different degrees, such as Binance”. Brooks, who was chief legal officer prior to his appointment as acting head of OCC Coinbases, said he was concerned about the casting of rival aspersions on Binance. US: “I wish the world hadn’t worked like this. It is obvious, ”said Brooks. He said that Binance.US plans to triple the number of employees on its regulatory, legal and compliance teams soon, and that the company has joined several trade associations to represent the interests of the crypto industry with regulators. Other exchanges have their own regulatory problems. The CFTC fined Coinbase $ 6.5 million in March for giving investors misleading information about their exchange’s trading volume. Last month, Coinbase and three other companies formed a new trade association called the Crypto Council for Innovation. Many executives in the cryptocurrency see this as a rival to the Blockchain Association, which Coinbase sees as being affected by Binance’s membership. A representative from the Chamber of Commerce said the founding of the group had nothing to do with the disagreement with the Blockchain Association. Questions about the relationship between Binance Holdings and Binance.US are not limited to lobby groups. Lawmakers and some regulators ask about Binance in meetings and seem confused about Binance Holdings’ involvement in US business, which is overseen by the country’s regulators and even where Binance Holdings is headquartered, according to two cryptocurrency company lobbyists . A spokeswoman for Binance.US said the company hadn’t gotten into such confusion itself. Nomadic existence Zhao has adopted a nomadic existence for himself and his company. When the Chinese government cracked down on the exchange of cryptocurrencies, Binance Holdings relocated its operations and claimed to have a presence in Japan, Malta and Singapore, among others. Last year, Zhao denied the company even had a home base, saying the headquarters were wherever he was. On the legal filing, the company’s lawyers say it is incorporated in the Cayman Islands, known as the offshore tax and regulatory haven. Originally, US investors could have accounts on Binance.com, although some of the trading practices were banned in the US In 2019, Binance restricted access to US investors, saying it was partnering with BAM Trading Services Inc., a company in Delaware, closed to establish Binance.US.BAM filings and initially listed Zhao as the sole director. Now the records show three directors: Zhao, Binance Holdings CFO Wei Zhou, and former BAM CEO Catherine Coley. A Binance.US spokeswoman said this was no longer the current board composition but declined to say how this has changed. According to Brooks, Zhao recruited him for the job and gave him complete control of the management. He said he and Zhao have a good relationship and that BAM plans to attract more investors and expand its board of directors. “I didn’t want to come here and give a badge to a company that is really run elsewhere,” said Brooks.Zhao worked at Bloomberg LP, parent company of Bloomberg News, from 2002 to 2005 in a division that develops trading technology and analytics. Despite their rapid growth, neither Binance.US nor Binance Holdings have built a large presence in Washington unlike some others. Binance Holdings recently hired former Senator Max Baucus, a Montana Democrat, for policy advice and liaising the company with regulators and lawmakers won. Neither Binance Holdings nor its US counterpart have registered lobbyists. By comparison, Coinbase had two firms in the last quarter with nine lobbyists representing the company. Brooks said he hadn’t decided whether Binance.US would hire its own lobbyists but would do much of the liaison with lawmakers and regulators himself with other Binance. You can find more such stories on bloomberg.com. Sign up now to stay up to date with the most trusted business news source. © 2021 Bloomberg LP



Share.

Comments are closed.