Changpeng Zhaos company Binance is everywhere and yet based nowhere. The cryptocurrency exchange has processed trillions of dollars in trades this year as it transfers digital and conventional money around the world through a constellation of affiliates. And yet it has no headquarters. Incorporated in the Cayman Islands, the company has grown at extraordinary speed into a leading player in the fledgling industry. But the 44-year-old Canadian-Chinese moguls business empire is now attracting intense scrutiny from global watchdogs as they grapple with new financial entities that act in many jurisdictions but are rooted in none.
Binance has led a peripatetic life since its founding by Zhao, who goes by the moniker CZ (pronounced Sea-Zee), in China four years ago. The company shifted its operations after a broad crypto crackdown by Chinese authorities in 2017. After it landed in Japan, regulators warned in 2018 it was doing unauthorised trading in cryptocurrencies in the country. Maltas then prime minister Joseph Muscat welcomed Binance with open arms that year, but in 2020 its financial regulator proclaimed that despite the companys operations in the EU state, it was not responsible for regulating the exchange. Zhao, whose wealth was valued by Forbes at almost $2bn when bitcoin was on the ascent in March, insists the company has no formal headquarters. You have to have an entity, you have to have a headquarter, you have to have a bank account. All of those things dont need to exist for blockchain companies, he told a crypto conference in 2020. He did not respond to a request to be interviewed for this article.
Regulators on three continents are clamping down on the company, one of the worlds biggest cryptocurrency exchanges by volume, as they attempt to police the porous border between the largely freewheeling crypto sector and the more tightly-regulated conventional financial market. The UKs Financial Conduct Authority last week banned a regulated affiliate called Binance Markets Limited from offering any traditional financial services that fall into the regulators remit, such as arranging investment deals in the UK. It also said the group was not authorised to conduct crypto asset business within Britains borders and warned consumers that transactions with unregistered companies are generally not covered by investor protection schemes. The move by the UK regulator follows a warning from Japan last month that mirrored the concerns first expressed in 2018. And it comes as the company is preparing to pull out of the Canadian province of Ontario following a broader crackdown by its Securities Commission. The Cayman Islands Monetary Authority said on Thursday that Binance is not authorised to run a crypto exchange there either, and is investigating whether any of its operations are based in the tax haven. On Friday, Thailand filed a criminal complaint against the company for allegedly operating without a licence.
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