US and China try to slam Binance, SBF’s $40m bribe claim: Asia Express

Our weekly roundup of news from East Asia compiles the most important developments in the industry.

Secret US User of Binance

On March 27, the US Commodity Futures Trading Commission (CFTC) charged Binance and its founder Changpeng Zhao with willful evasion of federal law and operating an illegal exchange of digital assets. In the 74-page complaint, the CFTC alleges that despite the exchange’s public stance of banning US users, internal documents show that at least 20% to 30% of the exchange’s traffic comes from US customers. This equates to around three million alleged US users by mid-2020.

Crypto exchanges must register with the CFTC or the US Securities and Exchange Commission before receiving US clients. However, the CFTC alleges that Binance ignored such a ruling, as its executives claimed that the rules were “not appropriate” in the context of Binance’s corporate structure and that it was “more profitable” to simply circumvent them. Was.

Since the allegations surfaced, Chicago-based quantitative trading firm Radix Trading has confirmed that it is one of three major trading firms reported by Binance and listed in the CFTC complaint. In an official statement, Binance called the CFTC lawsuit “unexpected and disappointing.”

Founded in China in 2017 by CZ, Binance quickly became the world’s largest crypto exchange thanks to its cheap trading mechanism and wide range of products. However, the exchange also came under intense scrutiny from regulators for allegedly lax KYC and anti-money laundering measures. The CFTC seeks to waive revenue generated by US users’ trading activities, civil fines and permanent injunctions, among other things.

Interestingly, a screenshot cited by the CFTC shows that Binance’s largest revenue in 2019 came from the US and China geographies, both countries where is not authorized to operate.

Unexpected American Ally in the Fight Against Binance

From heated diplomatic debates over human rights issues in the South China Sea, the US and China, the two great superpowers, often find little common ground in everyday global affairs. However, it looks like the two have finally found one entity worthy of mutual disdain: Binance.

Around the same time that the CFTC unveiled its investigation into allegedly secretive US users on Binance, a March 23 report from CNBC found that Binance employees or volunteers had attempted to use KYC verification for mainland Chinese users. shared techniques to bypass the exchange for .

The techniques shared include using fake residential addresses, VPNs, non-Chinese affiliated email addresses to create an account and then linking it to a Chinese national ID.

Cryptocurrency exchanges have been banned in China since 2017, with keywords searches using “binance” banned on websites and major social platforms.

That same week, an investigation by The Financial Times alleged that Binance had significant ties to mainland China, despite the move in 2017. A Binance spokesperson told Cointelegraph that Binance “does not operate in China nor does it own any technology. including servers or data located in China,” and “we strongly refute claims to the contrary.”

Despite their differences, the US and China have finally found common ground in the fight against Binance.
Despite their differences, the US and China have finally found common ground in the fight against Binance. (Magazine via immagflip)

SBF alleges $40 million in kickbacks to Chinese officials

In a new set of charges filed by the US District Court in the Southern District of New York against Sam Bankman-Fried (SBF), the founder of bankrupt cryptocurrency exchange FTX, prosecutors allege that SBF paid $40 million to one or more of the Chinese government. Did. Officer. For accounts belonging to Alameda Research, which was based in Hong Kong.

In 2021, Chinese authorities are said to have frozen $1 billion worth of cryptocurrencies from trading accounts on Chinese exchanges owned by Alameda Research as part of an ongoing investigation into counterparties. Exchanges were banned in China in 2017, but actual enforcement and user offboarding came at a later date.

After months of unsuccessful attempts to unlock the accounts, the self-proclaimed influential philanthropist apparently concluded that the wheels of justice needed a little oil. Prosecutors say that under direct orders from the SBF, an Alameda employee allegedly transferred $40 million from a company account to a private wallet in November 2021. Shortly thereafter, all Alameda trading accounts were reversed and SBF quickly returned to its regular trading activities. The criminal trial for the disgraced crypto executive is set for October 2, 2023, and he could face up to 115 years in prison if convicted on all charges.

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Rape allegation against China’s blockchain executive

Jun Yu, founder of Web 3.0 fund A&T Capital and former investment director at cryptocurrency exchange OKEx, is currently under criminal investigation by Chinese authorities over allegations of sexual misconduct, according to local media reports on March 28.

u are allegedly Left His role at A&T Capital following the allegations. According to the indictment, the incident began when Yu’s car collided with a vehicle driven by the alleged victim, Ms. Wan, at an unspecified time of year in Hangzhou, China. Captivated by her “beauty”, Yu then asked Ms. Wan to her WeChat contact to “discuss compensation”.

After that, Yu made repeated requests to invite Ms. Van for dinner, to which she agreed. Officials say that during the meeting, Yu allegedly pressured Ms. Wan began drinking heavily, boasting about his connections to senior Chinese Communist Party officials. Later, Yu called a taxi and took the woman to a nearby hotel where she was allegedly raped.

Yu fled to Singapore shortly after the alleged incident, a country that perhaps unknown to Yu has an active extradition deal with mainland China. Hangzhou police reportedly found evidence at the scene that resulted in his swift arrest.

A&T Capital was founded in 2021 and has raised $100 million in funding through 2022. The fund has invested in notable crypto projects such as Sui Network, Scroll and BitKeep’s Misten Labs.

The company has since stated that it has “zero tolerance” for illegal or unethical activities and will launch its own independent investigation in addition to cooperating with law enforcement regarding the incident. Jun Yu previously served as the Director of Investments at OKX from March 2018 to July 2019.

Jun Yu's Twitter account.
Jun Yu’s Twitter account with professional details. (Twitter)

xiyuan sun

Zhiyuan Sun is a reporter at Cointelegraph, focusing on technology news. He has many years of experience writing for major financial media such as The Motley Fool, and Seeking Alpha.

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