It’s been quite a few days for those paying attention to cryptocurrency related events in the East Asia region. From a shock lawsuit filed against the behemoth Binance and its founder Changpeng Zhao, to a $40M Chinese bribery scandal, both the US authorities and China’s have made their stance clear on the matter: there’s no tolerance for any exchange playing fast and loose with the law.
At the center of the controversy is the world’s largest cryptocurrency exchange, Binance. In 2020, Malaysia had already ordered Binance to cease its services in the country due to its founder Changpeng Zhao’s alleged violation of trading and derivatives law. Now, just one year later, U.S. based organizations have joined Malaysia’s corner, filing a lawsuit alleging similar offences. According to the US Commodity Futures Trading Commission, Binance has been aiding US customers to hide their true locations, trading against its users and maintaining house accounts to engage in proprietary trading. What’s more, the exchange’s investigation is linked to anti-money laundering, the potential use of customer funds, sanctions evasion and tax offenses.
The legal firestorm’s not just for Binance though. FTX, a bankrupted crypto exchange, is also mentioned in the news, with allegations of its founder, Sam Bankman-Fried, paying Chinese officials a whopping $40 million in bribes in order to unfreeze related accounts. Furthermore, Chinese blockchain executive Jun Yu has been subject to a criminal investigation for his alleged involvement in sexual misconduct. These events have led to the astonishment of investors and observers, who draw comparisons between the CFTC’s charges against Binance, and FTX’s collapse due to improper use of customer funds.
In response to the recent incidents, the Department of Justice, Internal Revenue Service and the US Securities and Exchange Commissioner have promised strict legal action against those involved to ensure that none of the incident’s repercussions escalate further. The scandal is set to intensify with Coinbase, another major American crypto exchange, potentially facing regulatory problems with the SEC.
Overall, it is clear that both the US and China have a “zero-tolerance” policy for cryptocurrency exchange violations. As more information about the events develop, the battle for East Asia’s crypto-landscape is set to be an intense one. At this point, the only certainty is the shocking truth behind Binance’s unmasking: a powerful ally, $40 million bribes, and the fight for dominance in the East.