Binance Staff Reportedly Helping Users Bypass China’s Crypto Ban – Here’s What You Need To Know
CNBC’s recent investigation has dropped a bombshell, Binance employees may be actively helping Chinese users avoid the country’s rigid crypto regulations.
The investigation examined translated messages from Discord servers and Telegram groups associated with Binance, the world’s largest cryptocurrency exchange by volume and assets.
While Binance claims it is not operating in China after the 2021 trading ban, messages from official Chinese-language chat rooms reveal Chinese customers artfully bypassing Binance’s Know Your Customer (KYC) checks and hiding their true country of residence.
Ingenious techniques range from forging bank documents and creating fake addresses to exploiting loopholes in Binance’s system, often shared by Binance employees themselves.
Amazingly, Binance staff and volunteer ‘Angels’ have reportedly provided video guides and documents, guiding users in spoofing their country of residence to secure a Binance debit card, and converting their crypto assets into a traditional checking account.
KYC/AML bypass national security risks
These findings raise serious concerns about Binance’s KYC and anti-money laundering (AML) efforts.
Sultan Meghji, a Duke University professor and former chief innovation officer at the FDIC, voiced his concerns to CNBC.
“If I had an eight out of 10 concern for Binance from a regulatory perspective and from a national security perspective, this takes it to a 10 out of 10,” Meghji said as the academic underlined the potential national security risks, alluding to how malicious actors such as terrorists, Criminals and money launderers can exploit such techniques.
In stark contrast, Binance founder Changpeng ‘CZ’ Zhao has praised the exchange’s KYC systems as a “billion dollar effort” with advanced VPN detection tools.
A spokesperson for Binance claimed that employees are “explicitly prohibited from suggesting or supporting users in circumventing local laws and regulatory guidelines,” with violations resulting in immediate termination or audit.
How are users subverting Binance?
Binance has not allowed Chinese mobile phone registrations and blocked Chinese IP addresses since 2021.
Still, the survey revealed recommendations for VPN use to mask users’ locations and breach the Chinese domestic firewall.
Users were asked to register as Taiwanese residents, then switch their nationality back to Chinese, and avoid VPN nodes in the US, Singapore and Hong Kong to avoid potential domestic project restrictions.
Another disturbing finding is a mirror platform hosted by Chinese giant Tencent, which apparently facilitates onboarding for Chinese customers using domestic phone numbers, although Binance denies recognition.
Additional advice includes registering email hosts in crypto-friendly countries, forming foreign companies for KYC purposes, and acquiring Palau digital IDs for use with external email forwarding addresses in Austria, combined with fabricated bank statements created via PDF editors.
The investigation also revealed Telegram advertised services for forging financial documents as proof of address.
These revelations trigger questions about the source of funds, as financial institutions may perceive funds originating from Binance as suspicious.
With growing concerns over Binance’s regulatory compliance and national security, investors and regulators alike must heighten their vigilance to safeguard the integrity of the crypto ecosystem.
This news comes as Coinbase faces an SEC lawsuit despite years of demanding regulatory clarification and SEC participation consistent with best practices.
