From trading hiccups to stablecoin woes, the world’s largest crypto platform has had a rough 2023. And now, after a new report, regulators are circling like sharks before a feeding frenzy.
Driving the news: Relations between Binance and Binance.US (a supposedly completely independent US subsidiary) are reportedly much closer than they appear, according to The Wall Street Journal.
- Text messages and documents reviewed by the WSJ and interviews with Binance employees show the two entities shared staff, finances, and a crypto-selling entity.
- Also, Binance developers in China maintained code supporting Binance.US digital wallets, potentially giving Binance access to US customer data.
Why it matters: After FTX’s collapse last year, Binance is the last giant standing. A former Commodity Futures Trading Commission chief of staff told the FT, “[Binance] is essential to keeping the markets alive… [the industry] is praying for the survival of its most centralizing force.”
- If Binance and Binance.US are as tight-knit as it appears, US regulators could claim the right to police the entire business. That would make a full-scale regulatory lawsuit possible, which one Binance exec likened to “nuclear fallout” for the company.
Zoom out: These revelations couldn’t come at a worse time for Binance. A bipartisan group of US senators recently dubbed the platform “a hotbed of illegal financial activity” and called on the company to answer questions about its US-based users.