The British FCA has just banned the crypto exchange Binance from trading regulated products such as derivatives and issued a warning to users of the platform. Now the world's largest crypto exchange, according to its own information, is apparently being targeted by authorities worldwide, because a corresponding institution in the Cayman Islands is now also investigating Binance. Is this just scaremongering - or is the coin provider really in for trouble?
Binance and the authorities
The Cayman Islands Monetary Authority (CIMA) is currently investigating Binance. It is said that the world's largest exchange is operating on the island without a licence. In an official statement, CIMA clarifies: Neither Binance nor any of its affiliated companies are authorised to offer such services in the country.
The press release emphasises:
"The Authority is currently investigating whether Binance, Binance Group, Binance Holdings Limited or any other entity associated with this group of companies is conducting any activities in or from the Cayman Islands that may fall within the scope of the Authority's regulatory oversight."
However, Binance Group and Binance Holdings Limited were not registered, licensed, regulated or otherwise authorised by the Authority to operate a cryptocurrency exchange within the Cayman Islands, it said. According to the Regulator, any company incorporated or registered under the Cayman Islands Companies Act, 2020 that provides virtual asset services must be licensed (under the Virtual Asset Service Providers Act, VASPA).
Binance considers itself "decentralised"
A Binance spokesperson commented on the accusation, referring to the "decentralised" nature of the exchange. It is truly decentralised and therefore has no "physical" central office:
"Binance.com has always operated in a decentralised manner. Binance.com does not operate a cryptocurrency exchange from the Cayman Islands, as some media articles have previously erroneously reported."
"We do, however, have entities incorporated under Cayman Islands law that conduct activities that are permitted by law and are not related to the operation of crypto exchange trading activities. We will work with regulators to resolve any issues."
A few months ago, Binance had claimed that its headquarters were in Malta. However, according to local authorities, Binance is not registered there either. Time and again, the crypto exchange for coins such as Bitcoin, Ethereum (to buy at eToro) or Dogecoin has found itself in the media lately on the topic of regulation and licences, most recently in the UK as mentioned at the beginning: According to the Financial Conduct Authority (FCA), the British Binance offshoot Binance Markets Ltd "may no longer carry on any regulated activities without the prior written consent of the FCA with immediate effect".
For many, these are normal measures of a regulatory authority - but numerous media thought Binance was already finished due to the announcement. It turned out differently: the platform only suspended its operations for one day - after that, it went back to business as usual. It is quite possible that the same will happen on the Cayman Islands.
Binance CEO Changpeng Zhao speaks of scaremongering ("FUD" - Fear, Uncertainty & Doubt) and comments on Twitter in a relaxed manner: