By Dan Byrne for AMLi
THE WORLD’S LARGEST cryptocurrency exchange firm is under fire over a leaked document which shows it planned to intentionally side-step bitcoin regulations in the United States.
As part of an elaborate “bait and switch” scheme, Binance Holdings Limited used a US-based subsidiary to “distract” regulators while money was moved illegally and key potential clients were taught how to evade geographic restrictions.
Information on this scheme was obtained by Forbes in the form of a digital presentation, originally composed in 2018 and shown to senior Binance executives that year.
The presentation spoke of a “Tai Chi entity” – a Binance-controlled firm which would be set up in the United States and be extremely vocal about its desires to be compliant with US crypto regulations.
Meanwhile, a behind-the-scenes protocol would be enacted whereby revenue – in the form of licensing fees etc – would be moved to the parent company while regulators were distracted by the subsidiary.
The presentation made direct references to the “need to undermine the ability of anti-money laundering and US sanctions enforcement to detect illicit activity,” Forbes reported Thursday.
This involved the deliberate distancing of the US subsidiary from organisations and authorities directly concerned with tracing and prosecuting financial crime, such as the US Treasury’s FinCEN and the Office of Foreign Assets Control (OFAC).
For that distance, the presentation proposed heavy involvement with the Department of Homeland Security’s (DHS) Cornerstone Program – for detecting weaknesses in financial systems. A DHS spokesperson subsequently confirmed to Forbes that this did happen.
Accusations of fake news have surfaced since the information was published by Forbes Thursday.
Binance founder CZ originally did not respond to a request for comment, but spoke out on Twitter once the information had been published, claiming that the presentation cited was not created by any current or former employee of the company.
“Binance has always operated within the boundaries of the law,” he tweeted, going on to reference the fact that his organisation has been involved with several AML and CTF agencies including Ciphertrace, Elliptic and Refinitiv.
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