Internal messages between Binance executives cast more doubt on the alleged independence of the Binance.US digital asset exchange.
On Sunday, the Wall Street Journal reported on internal communications that poke larger holes in Binance’s oft-repeated assertions that the Binance.US exchange is an independent entity free from the international site’s influence. Binance claims the U.S. site merely licenses the international exchange’s technology and brand.
However, these claims were exposed as an elaborate subterfuge as early as 2020, when Forbes reported on Binance’s illegal ‘Tai Chi’ strategy. Bam Trading Services, the company that controls Binance.US, is controlled by Binance’s controversial founder Changpeng ‘CZ’ Zhao.
Despite Binance’s denials, Reuters subsequently confirmed the existence of the Tai Chi strategy, which involved setting up a supposedly independent, regulatory-friendly U.S.-licensed operation to distract attention from Binance.com’s ongoing reliance on U.S. customers for a significant chunk of its business.
The Journal’s new revelations include frantic messages from a Binance software developer in September 2019 after a Shanghai-based staffer mistakenly allowed trading on Binance.US ahead of the exchange’s scheduled launch. CZ replied that the culprit was “a guy here in Shanghai, mistake operation.”
The Binance.US tech infrastructure was controlled from Shanghai until at least mid-2021, and the Shanghai software team was contracted by the international Binance, not the U.S. version. A Binance.US spokesperson told the Journal that U.S. customer data was stored in the U.S., and there was no commingling of user data between the two allegedly independent entities.
But one month before Binance.com allegedly cut off its U.S. customers, Binance’s then-Compliance Chief Samuel Lim posted a message in a Binance chat on Telegram suggesting ways for Binance.com to retain its U.S. customers, who at the time accounted for over 18% of Binance.com’s page views. Among Lim’s suggestions for U.S. customers? “Have them be creative and VPN [virtual private network].” Lim also suggested that U.S. customers could continue to access Binance.com via ‘offshore entities.’
Around the same time, CZ stated in a since-deleted tweet that he considered VPNs “a necessity, not optional” tool for accessing the internet. Oddly enough, Binance’s ‘Tai Chi’ strategy also made note of the importance of “strategic treatment of VPN use at Binance.” And in mid-2020, the Binance Academy educational tool published a handy guide detailing the benefits VPNs offered.
