Binance seems to be facing an onslaught of regulatory and legal kerfuffle as the offices of its Australian counterpart were raided by financial regulators as part of an ongoing investigation into the crypto exchange’s former derivatives business.
Sources familiar with the matter revealed that the Australian Securities and Investments Commission (ASIC), the nation’s renowned financial regulator, conducted searches at various Binance Australia locations on Tuesday.
ASIC’s scrutiny of Binance’s derivatives operation revolves around the classification of retail and wholesale clients at Binance Australia. In April, the company announced the winding down of its local derivatives exchange, while assuring the continuation of its spot platform. Binance had to close the derivatives positions of certain Australian users due to their incorrect categorization as wholesale investors.
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While an ASIC spokesperson refrained from confirming or denying specific operational details, the regulatory body stressed that its review of Binance is an ongoing process. It is worth noting that ASIC had already canceled Binance Australia’s license for derivatives operations earlier this year.
It was earlier this year as well when Binance Australia announced that certain users can no longer deposit or withdraw funds due to the termination of services by Cuscal, a third-party provider.
In response to the regulator’s move, Binance said that it’s “cooperating with local authorities” and “is focused on meeting local regulatory standards in order to serve our users in Australia in a fully compliant manner.”
In another setback, French authorities recently visited Binance’s offices in France as part of their investigation into alleged illegal provision of digital-asset services and acts of aggravated money laundering. Binance has vehemently asserted its compliance with all laws in France and every other market where it operates.
The company has also faced setbacks in Germany, as the country’s financial watchdog, the Federal Financial Supervisory Authority, has reportedly decided not to grant Binance a custody license.
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European Union authorities have also recently flagged Binance’s operations in Ireland and Malta, expressing concerns about potential illicit activities such as money laundering and tax evasion. Investigators suspect Binance of obfuscating its accounts and operations across various EU jurisdictions, commingling funds from different countries to evade scrutiny from regulators and tax authorities.
Paysafe Payment Solutions, the European banking partner of cryptocurrency exchange Binance, has also announced that it will no longer offer its embedded wallet solution to Binance across the European Economic Area (EEA) starting from September 25th. The decision comes as Paysafe and Binance work together to implement a fair and orderly process for terminating the service over the next few months.
Adding to its challenges, the US Securities & Exchange Commission (SEC) recently accused Binance and its founder Changpeng ‘CZ’ Zhao of mishandling customer funds, misleading investors and regulators, and violating securities regulations. Binance expressed disappointment with the SEC’s action and vowed to vigorously defend its platform. Notably, Binance and Zhao are also facing a lawsuit from the Commodity Futures Trading Commission.
As Binance continues to face regulatory challenges in Europe and the U.S., it has announced its retreat from the Netherlands and Cyprus, requested the cancellation of permissions in the UK, and been ordered to cease offering crypto services in Belgium.
Information for this briefing was found via Bloomberg and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
