crypto’s last man standing confronts a hostile world

In a plea for a more crypto-friendly UK watchdog, he added: “Binance have just announced their European HQ in Paris for heaven’s sake.” He has also spoken at private members club “Crypto Club Global”. Hancock has said he doesn’t own any cryptocurrencies and has turned them down when offered.

Binance is an “Institutional Member” of lobby group CryptoUK, which costs up to £20,000, according to a brochure. CryptoUK helps run the All-Party Parliamentary Group on Crypto and Digital Assets, which it funded to the tune of £46,000 this year.

And its efforts are not limited to the UK. In the US, Binance’s independent American division has launched a “Political Action Committee”. Such groups are typically used to fund legislation or make donations to politicians.

In the EU, transparency disclosures show it has ramped up lobbying efforts. Last year, it spent more than half a million euros on wooing Brussels ahead of the EU introducing a new law to regulate digital coins.

Advisers to Binance in the UK include PR firm Hawthorn, which previously represented Chinese tech giant Huawei as it battled a UK 5G ban. He is heavily employed in Britain to bring in legal and regulatory experts. In April, he hired Steven McWhirter, a former FCA enforcer.

Hillmann, of Binance, insists the company has no plans for “spending lavishly on political giving”. Bankman-Fried, the disgraced boss of FTX, is now notorious for having donated more than $40m to US Democrats in an effort to woo them.

Despite its efforts to alleviate concerns, Binance has been on the receiving end of sharp criticism from UK regulators. The FCA issued three statements warning about its activities. In June 2021, it barred Binance from launching a UK division.

The FCA said the company had refused to disclose what company was behind its website The regulator issued further warnings in February, over a deal between Binance and a UK payments company, and in March over a potential acquisition.

Since being blocked, the crypto company has reapplied for a UK licence. It told MPs it had been in talks with regulators for more than a year.

Some MPs have raised questions over Binance’s role in the demise of FTX. Days before it collapsed, Zhao said he planned to sell $500m in tokens developed by FTX. Its price tumbled. He also backed out of plans to take over FTX.

Harriett Baldwin, an MP on the Treasury Committee, said: “It must have been apparent when that decision was taken that it was likely to cause the collapse of FTX.” Binance has denied this.

FTX’s failure has revealed a web of apparent fraudulent activity, including misuse of customer deposits, although Bankman-Fried denies wrongdoing.

Regardless, the demise of its biggest rival is only likely to make authorities even more cautious about allowing another off-shore exchange access to UK consumers.

“This sets the industry back a couple of years,” Daniel Trinder, the company’s London-based head of public policy, admitted to MPs last month.

Alexander Carter-Silk, a lawyer at Keystone Law, says: “Crypto exchanges are now facing a huge challenge to alleviate the concerns of regulators as confidence in the market has declined dramatically.

“Binance has been less than forthcoming in a number of cases about their management and who is actually in control. This has undoubtedly caused concern amongst regulators.” Binance says the company is undergoing a restructure and to simplify its business.

Hillmann, however, claims the UK could be left behind on cryptocurrency if it moves too slowly to regulate digital coins. “It would be a historic miscalculation to allow crypto to continue to proliferate in mainland Europe without it having some kind of footprint in the UK,” he says.

The latest challenges for Binance include possible US criminal charges. Hillmann says the company can not prejudge the outcome of investigations, but adds: “Regulators in the US have a broad spectrum of investigations into the industry. We are the largest, so obviously we will be part of some inquiries.”

This week, Zhao was evasive when asked if he would be visiting the US any time soon. “I’m quite busy,” he said, “I’m not against traveling to the US.”

Andrew Thurman, a cryptocurrency analyst at Nansen, said this had “caused jitters among both retail and institutional users”.

Zhao has downplayed the exodus of funds, insisting the company’s deposits are backed one-to-one, unlike FTX which wasted customer funds on high-risk investments.

The failure of FTX was described last week as “old fashioned embezzlement” by John Ray, the man in charge of restructuring the failed exchange, run by “incompetent and inexperienced” kids. Executives spent lavishly on penthouses and boats before its demise.

Zhao is now attempting to portray Binance as the mature face of crypto.

“Binance runs a very different type of business,” Hillmann says. “There are no yachts at Binance.”


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