Binance Asked to Provide Details on its Governance and Ownership
- Binance received a preliminary minimal viable product (MVP) license from VARA last September.
- The license enables the company to open a location in the United Arab Emirates and offer its services to pre-qualified investors.
Regulators across the world have increased their scrutiny of the crypto industry and crypto exchanges, and Binance has been on the receiving end of most decisions. Dubai’s crypto regulator, the Virtual Assets Regulatory Authority (VARA), has demanded more information about Binance’s business operations in a bid to improve regulatory measures in the emirate.
A Bloomberg report claimed that VARA asked Binance to provide detailed information about its auditing processes, governance, and ownership structure. Sources claim that the Dubai regulator has demanded similar information from exchanges seeking licenses in Dubai.
Binance has faced increased scrutiny from regulators in the United States, and Dubai’s new demands will most likely add to the exchange’s pressures. The US Commodity Futures Trading Commission recently filed a lawsuit against Binance and its CEO, Changpeng Zhao, for illegal trading activities. CFTC Chairman Rostin Behnam said Binance executives knew for years “they were violating CFTC rules, working actively to both keep the money flowing and avoid compliance.”
The CFTC claims that from July 2019 to the present, Zhao and Binance offered and carried out commodity derivatives trades to and for US citizens, violating US laws. Binance does not have the authorization to operate in the US. However, it has a division called Binance.US that serves US-based investors.
Additionally, Binance is accused of directing employees to contact American clients about control evasion “through a messaging application that was set to automatically delete written communications.” The CFTC claimed that Binance employed that means of communication in order to conceal its efforts to continue serving customers based in the United States.
Zhao said the CFTC’s complaint was “unexpected and disappointing.” He said in a statement,
Upon an initial review, the complaint appears to contain an incomplete recitation of facts, and we do not agree with the characterization of many of the issues alleged in the complaint.
Despite the strong accusations it has faced, Binance has maintained its innocence and continued to offer its services. However, crypto users have grown concerned that the exchange might suffer a similar fate as FTX. But, Zhao believes Binance is stable enough to survive.
Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.
