Senators demand answers from Crypto Giant Binance. Don’t get your hopes up.
A bipartisan group of US senators has called for transparency from cryptocurrency giant Binance, demanding answers to what they call “potentially illegal business practices.” Don’t get your hopes up for a satisfactory answer.
Sens. Elizabeth Warren (D., MA), Chris Van Hollen (D., MD) and Roger Marshall (R., KS), requested massive amounts of information from the world’s largest crypto exchange in a letter to Binance CEO Changpeng Zhao and the head of the American exchange Binance.US, amid “increasing concerns over … finances, risk management and regulatory compliance”.
Amid the turbulence unleashed on the cryptocurrency (crypto) market following the rapid collapse of crypto exchange FTX, Binance is now facing investigations into evasion of criminal sanctions, conspiracy to launder money, unlicensed money transmission, questions about its financial health and increased scrutiny of its willful ‘opaque corporate structure'”, says the letter sent on Thursday.
The senators said investigations revealed that Binance evaded US regulators, facilitated money laundering and sanctions evasion, and a lack of transparency.
“Unfortunately, a lot of misinformation has been spread about our company, including in several of the articles heavily cited in the letter, and we look forward to correcting the record in our official response,” a Binance spokesperson said in a statement to Barron’s. “We appreciate the senators’ request and will provide them with information to help them better understand why we remain the most trusted platform with users worldwide,” they added.
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The question from legislators is big. The senators requested that by March 16 Binance provide all balance sheets for the company and its subsidiaries dating back to 2017. In addition, the lawmakers requested information about US-based users, communications related to allegations of distracting regulators, internal anti- money laundering, communications related to limiting anti-money laundering compliance, guidelines regarding the relationship between Binance and Binance.US, and a complete list of all US platforms that have used Binance.
There is a lot of unprecedented information required in just weeks.
Market watchers should not get their hopes up. The senators’ demands look more like a publicity stunt than a blow to what is by far the world’s most important trading platform for digital assets. The letter comes independently of a committee, and while the senators are of course high-profile lawmakers, they seem powerless to affect immediate consequences for non-compliance, and have not issued any subpoenas.
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That doesn’t mean Binance shouldn’t be more transparent. The crypto giant is arguably the most important institution currently operating in the digital asset space, and questions remain about its corporate structure – it has no official headquarters – as well as its finances and financial practices. But answers, if they ever come, are unlikely to materialize as a result of this letter.
Write to Jack Denton at [email protected]
