In Brief:
- Binance is being criticized for failing to keep its promise of tougher compliance, according to a report.
- The report includes a review of confidential messages exchanged between Binance and regulators.
- Former Binance employees raised concerns of weak KYC checks to the CEO but CZ ignored them.
The world’s largest cryptocurrency exchange Binance is under fire as reports reveal the company failed to adhere to its promise on tougher compliance.
According to an investigation report by Reuters, while claiming openness to government supervision, the company’s CEO, Changpeng Zhao, oversaw an organization that routinely denied regulators’ requests for financial and corporate structure information.
The published report is based on the accounts of Binance’s former senior employees and advisers.
The report also includes a review of documents such as internal interactions and confidential messages exchanged between the organization and many national regulators.
According to the report, senior Binance executives, such as Chief Compliance Officer Samuel Lim and former Global Money Laundering Reporting Officer Karen Leong, expressed concern about Binance’s weak KYC checks.
Former Binance employees stated that they raised these concerns with CEO Changpeng Zhao, but he ignored them.
Binance allegedly went against the suggestions of its own compliance team by continuing to accept new users from seven countries designated as having a high risk of money laundering.
German police and lawyers representing over 30 suspected fraud victims sent Binance dozens of letters requesting information on several million euros they believe were embezzled through the exchange.
According to several of the letter’s senders, Binance replied by saying it couldn’t help.
Binance has consistently refused to specify the jurisdiction in which its main online exchange is based, complicating regulators’ efforts to monitor its operations.
The report comes at a time when recently Changpeng Zhao was named the crypto industry’s wealthiest person. Also known as CZ, the Binance CEO has an estimated net worth of $96B. CZ holds this much net worth without including his personal holdings of crypto.
CZ responded to the investigation report and refuted all the claims as expected.
Last week Binance hit the headlines when Pakistan’s law enforcement agency issued a notice to Binance about a scam that cost Pakistanis $100M. Investors were being scammed into transferring funds from Binance wallets to unknown third-party wallets and the Pakistani government launched a criminal inquiry.
