According to reports, the world’s largest crypto trading platform Binance has concealed its connections to China. If the allegation turns out to be accurate, this could have severe consequences for the company.
After the Chinese government initiated a crypto ban in 2017, the crypto trading platform Binance said it had left the Middle Kingdom. To emphasize this, Binance CEO Changpeng Zhao stated that he was not Chinese but a Canadian citizen. Although he said he was born in China, he now holds Canadian citizenship after moving to Canada as a child. However, he confirmed that his company was founded in Shanghai.
However, he also stressed that the original founding team members had left China just two months after the company was established, following a local crackdown on the crypto industry. Thus, the crypto exchange is said to have never been registered or incorporated in the giant Asian country. “We no longer publish our office addresses … People in China can directly say that our office is not in China,” Zhao told a company newsgroup in November 2017.
However, according to a report in the Financial Times (FT), Binance is not said to have pulled out of China. Instead, the company reportedly concealed its activities in China, despite previously stating that the crypto exchange would no longer operate in China.
Documents available to the FT reportedly show that Binance went to great lengths to hide the details of its China affair. This could be the increased scrutiny of its crypto activities by U.S. regulators. Also, a deciding factor could be that there have been political and trade tensions between the U.S. and China in recent years. Documents show that Binance employees were paid through a Shanghai-based bank as recently as 2018. There were also reportedly times when employees were asked to attend tax meetings in a Chinese office. In addition, Binance continued to hire staff for critical positions in Shanghai, including data analysts and clearing specialists. This was reportedly the case even after Zhao’s claims that Binance had already pulled out of China.
In response to the FT report, a Binance spokesperson stated that the company “does not operate in China, nor do we have any technology, including servers or data, based in China.” The spokesperson added, “We strongly deny claims to the contrary,” and further, “To be clear, the Chinese government, like any other government, does not have access to Binance data unless we respond to lawful and legitimate law enforcement requests.”
The company spokesperson then explained that they had a customer service call center in China to handle global Mandarin speakers. Employees from this center who wished to remain with the company were offered relocation assistance beginning in 2021.