Saturday, February 22, 2020

Binance not licensed to operate in Malta, regulators say


Controversial cryptocurrency exchange Binance has found itself scrambling to perform damage control and repair after regulators in Malta called it out over false claims. In a statement published by the Malta Financial Services Authority (MFSA) on Friday, the regulator made it quite clear that Binance has never received authorization to operate in the country. As a result, Binance has been trying to dance around the subject with some creative responses.

The MFSA's message reads, "Following a report in a section of the media referring to Binance as a 'Malta-based cryptocurrency' company, the Malta Financial Services Authority (MFSA) reiterates that Binance is not authorised by the MFSA to operate in the crypto currency sphere and is therefore not subject to regulatory oversight by the MFSA. The Authority is however assessing if Binance has any activities in Malta which may not fall within the realm of regulatory oversight. Admission of virtual financial assets to trading and/or for offering virtual financial assets to the public in and from Malta requires an MFSA licence in terms of the Virtual Financial Assets Act (CAP 590) of 2018."

It isn't clear where the assertion that Binance is a Malta-based company originated, but the exchange, led by controversial figure Changpeng "CZ" Zhao, is attempting to create its own rules regarding what defines business operations. Those attempts are falling flat.

For example, the company's chief growth officer, Ted Lin, told Decrypt just a few days ago, "We have offices in Malta for customer services, and some compliance people there, but it's not the headquarters per say [sic]. It's the spiritual headquarters. It's a name that people think about when they think about Binance."

Lin's comments to Decrypt were part of a larger story regarding the fate of the company in another region. Binance is, according to the countries' registry offices, registered in both the Cayman Islands and the Seychelles. However, the European Union (EU) is now ready to put the Cayman Islands on a blacklist of tax havens, which could make it difficult for any company registered there to do business with entities or individuals in the EU.

When it got started, Binance launched in China. However, as the country began to crack down on crypto, it decided to move to Japan. Not long after getting set up in its new headquarters, Binance suffered an attack on the exchange, leading Japan's Financial Services Authority (FSA) to require Binance to apply for a license. That apparently wasn't within the scope of the exchange's business model, and it left to find a new home, reportedly landing it in Malta.

The CEO of Malta-based Chiliz, Alexandre Dreyfus, weighed in on whether or not Binance is in Malta. He told Decrypt, "Insinuating that Binance doesn't have offices and people in Malta is offending for the employees here. As you can see on their website, they are still recruiting significantly in compliance, security, customer care."

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