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Government The Almighty Buck

Texts from Binance Reveal Plan to Elude US Authorities (livemint.com) 78

Posted by EditorDavid from the made-in-China dept.
Reuters writes: Binance, one of the world's largest cryptocurrency exchanges, developed a plan to avoid the threat of prosecution by U.S. authorities as it started an American entity in 2019, the Wall Street Journal reported on Sunday.
The Wall Street Journal reports: Any lawsuit from U.S. regulators would be like "nuclear fall out" for Binance's business and its officers, a Binance executive warned colleagues in a 2019 private chat. Worried about the threat of prosecution, Binance set out on a plan to neutralize U.S. authorities, according to messages and documents from 2018 to 2020 reviewed by The Wall Street Journal as well as interviews with former employees.

The strategy centered on building a bare-bones American platform, Binance.US, that would license Binance's technology and brand but otherwise appear to be wholly independent of Binance.com. It would shield from U.S. regulators' scrutiny the larger Binance.com exchange, which would exclude U.S. users. But Binance and Binance.US have been much more intertwined than the companies have disclosed, mixing staff and finances and sharing an affiliated entity that bought and sold cryptocurrencies, according to the interviews and the messages and documents reviewed by the Journal. Binance developers in China maintained the software code supporting Binance.US users' digital wallets, potentially giving Binance access to U.S. customer data.

If U.S. regulators conclude that these links mean Binance has control over a U.S. company, they could claim the power to police Binance's entire business, which, to many investors, has been a black box since the start. This would also put Binance's billionaire founder and chief executive, Changpeng Zhao, and his finances under closer scrutiny.... Developers in Shanghai maintained key software functions at Binance.US at least through the summer of 2021, the Journal has reported. The Shanghai developers' contracts were with Binance, not with the U.S. platform, according to a person familiar with the agreements.
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Texts from Binance Reveal Plan to Elude US Authorities More

Texts from Binance Reveal Plan to Elude US Authorities

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  • What? (Score:5, Insightful)

    by quonset ( 4839537 ) on Sunday March 05, 2023 @07:31PM (#63345413)

    You mean this completely honest and above board firm devised a plan ahead of time to evade scrutiny? I'm shocked!

    Shocked that it took this long to come out.

  • Looking for a reason to participate. (Score:5, Insightful)

    by Petersko ( 564140 ) on Sunday March 05, 2023 @07:33PM (#63345417)

    I'm really trying to look past all the dodgy secretive behaviour, the emperor-has-no-clothes value proposition, the sudden disappearances of people's funds while fucking near teenagers abscond with shady leftovers that make them wealthier than most people would ever imagine... Give me something. Give me a reason why these currencies and coins don't rightly belong in the dustbin of history. Something tangible, too - not the same tired shit that's been used to sell it for years. Even with the venerable old grandpa, Bitcoin... I accept that it's probably the honest broker. But is it needed?

    • Re:Looking for a reason to participate. (Score:5, Insightful)

      by iAmWaySmarterThanYou ( 10095012 ) on Sunday March 05, 2023 @07:48PM (#63345453)

      There is no reason for so called crypto currency (it is not a currency) to exist.

      It's pure scam.

    • Playing devil's advocate (Score:5, Interesting)

      by Powercntrl ( 458442 ) on Sunday March 05, 2023 @08:24PM (#63345517) Homepage

      There certainly are some arguments to be made why the internet needs an electronic equivalent to cash. Ask anyone who has an unfavorable experience with PayPal and they'll have plenty to say in that regard.

      There's also businesses (legal pot dispensaries are the first ones that come to mind) which have faced difficulty finding financial institutions willing to work with them. With some states moving to further restrict access to abortion drugs, being able to send money outside the traditional payment processing system might become more important than ever.

      It's like the situation with BitTorrent. Sure, you can use it for legitimate purposes and some people even do. But we all know what it's really primarily used for.

      • I've been buying stuff online without using crypto or Paypal for years and years.
      • Who uses cash? The only think I pay cash for on a regular basis is my barber. Everything else is a check, a credit card, or an electronic transfer. Many people do not seem to realize that almost all money today is nothing but an entry in a ledger. It has no physical existence of any kind. In fact, if you went to your bank and wanted a significant amount in cash, they would probably refuse to give it to you, unless you gave them advance notice. They might not even have it.

        • I'm not disagreeing. I never use cash for anything either, and I've bought something using cryptocurrency once, just for the novelty of it (a barebones Intel Celeron NUC, way back when TigerDirect used to accept BTC). Yeah, today that amount of Bitcoin probably would be worth about $11k. Certainly not enough that I'm gonna beat myself up over spending it.

          Again, it was just a devil's advocate scenario over the possible reasons some people might use it as currency. I don't smoke pot and as a cisgender gay

        • I use cash. Plenty of shops, especially the Vietnamese restaurants around me, heavily prefer cash.

          • I use cash. Plenty of shops, especially the Vietnamese restaurants around me, heavily prefer cash.

            Sure they do. So they can avoid paying taxes.

            • Maybe in your country where your tax system is shite.

              In Australia, it's pretty hard to set up a restaurant business without going through the nation's economic/banking system.

            • Sure they do. So they can avoid paying taxes.

              Also, if you need to pay your kitchen staff in cash because they can't get bank accounts.

        • Who uses cash?

          I think the point of previous post is precisely that as things move digital, fewer people use cash, which is why we need an electronic equivalent of cash (so we can exchange goods and values without being traced). Cryptocurrencies are just not the right instrument for that, because they are in principle traceable. Maybe Postal Orders, no idea how traceable they are nowadays. A Gift Card number works; this is closer to food stamps than cash but works for small payments between individuals who want to spend m

          • (so we can exchange goods and values without being traced).

            Not only that, but also situations where a bank and/or payment processor doesn't want to do business with the merchant. In addition to the examples I already included in my original post, here's another example from Apple Pay's Acceptable Use Guidelines [apple.com]:

            You may not incorporate Apple Pay into a website that:

            Violates any law or otherwise fails to comply with legal requirements
            Offers transactions involving:
            Tobacco, marijuana, or vaping products
            Firearms, weapons, or ammunition
            Illegal drugs or non-legally presc

            • I don't see how the "electronic cash" solves this problem. There are already alternative payment methods. The problem is Apple does not apps use them on their platform (and they won't allow electronic cash or cryptocurrencies either), or consumers don't bother looking for the website equivalent of the app purchase. If you have a normal website you can integrate many payment methods.

              • I don't see how the "electronic cash" solves this problem. There are already alternative payment methods.

                I gave it as an example of a payment processor (in this case, Apple) refusing to allow their system to be used for otherwise lawful purchases. Now, imagine Visa, MasterCard, Discover, and American Express adopted similar policies. You can stop imagining, because it's not just a hypothetical situation, the credit card companies I just named already will not allow transactions from marijuana dispensaries [aeropay.com].

                Regardless of how you may feel about pot (I personally have no interest in ever using it), the idea that

        • I pay private contractors under the table= cash, if they want it that way... we both save a little money from the taxman.
      • Bitcoin has a reasonably argued purpose. Things like NFTs and a lot of the other coins only exist to be scams. (In theory an NFT can have a value, but in practice there isn't a single NFT system that practically has value. Maybe in the future).

        • Bitcoin has a reasonably argued purpose. Things like NFTs and a lot of the other coins only exist to be scams. (In theory an NFT can have a value, but in practice there isn't a single NFT system that practically has value. Maybe in the future).

          I think one of the ideas behind Web 3.0 is that anything you post online is an NFT which is owned by you...
          Not saying its a brilliant idea.

          • Yeah, that is an arguably valuable idea, at a minimum it's worth thinking about. In the practical realm it doesn't exist yet. The idea hasn't been fully developed.

      • There certainly are some arguments to be made why the internet needs an electronic equivalent to cash.

        People buy stuff online every day. They spend billions of dollars, without using cash or Bitcoin. Crypto is bullshit that has no legitimate reason to exist.

      • Re: (Score:2, Troll)

        by DarkOx ( 621550 )

        here's also businesses (legal pot dispensaries are the first ones that come to mind)

        Except there is really no such animal - those are sill illegal at the federal level.

        With some states moving to further restrict access to abortion drugs

        Again that would make the purchase and use of those drugs illegal.

        Your entire argument here is that we need this stuff to commit crimes. Maybe you don't think these should be crimes, but they are. FCPA won't let you bribe public officials in *istan, never mind pay them in bitcoin!

        Honestly your attitude here is really anti-society. Its basically I can ignore laws I don't like. Reality is the every person that walks into one

        • The pot dispensaries are legal in their jurisdictions. The feds might have conflicting views about that, but the fact is we have a federal system where states control the legal basis of operations within their borders. The feds don't have policing authority in the states except as specifically authorized by Congress. The reason banks are skittish about doing business with them is that they are specifically chartered by a federal agency for interstate commerce.

          Anyway, the examples used by GP were about lega

          • Re: (Score:2)

            by DarkOx ( 621550 )

            Right - the feds lack the policing authority, it does not change the fact that it is a federal crime. There is zero good reason for the DOJ not be prosecuting these criminals.

            The reason banks are skittish about doing business with them is that they are specifically chartered by a federal agency for interstate commerce.

            You mean the banks know these business are illegal and don't want to run afoul of the law!
            -
            The GP did not sight any legal 'conflicts' the law is perfectly clear. The GP cited examples of law he does not like and wants to concurrency to help him and others flaunt.

            Your example are much better.

            • There is zero good reason for the DOJ not be prosecuting these criminals.

              I can think of at least two reasons: it would kill their donors' golden goose and be very unpopular among liberal voters who passed legalization referenda. Whether they are good reasons is a matter of perspective.

    • Don't make composition errors and don't threaten to kill anybody for trading good for bits, if it makes them happy.

      Can we agree to those basic morals? From there it's like any new tech - creative destruction is inevitable.

      All the US can do is go psycho and cede ground to the rest of the planet.

  • criminal intent from the onset (Score:3, Insightful)

    by sdinfoserv ( 1793266 ) on Sunday March 05, 2023 @07:41PM (#63345431)
    This part is not different than most corporations. Corporate crime has become banal. Oligarchs use their wealth to buy our electeds, change laws, place judges and steal our treasury. Why wouldn't a business model as depraved as crypto engage in the same activities.

  • I guess my favorite crypto blog was sponsored by Binance.

    • No. It's been widely reported that they are in the same chat groups together. Binance's CZ even ranted at FTX's SBF about why he was stabbing him in the back by trying to get SEC regulations that would hurt Binance. They are all doing the same kinds of shady shit. Outright lying about separation of accounts etc, because that is the only "real" way they can give the appearance of stability - by shifting funds around without any oversight.
  • I just ask the question: What is crypto? Is it a stock? Is it a security? Is it a currency? And anytime some is asked about this they keep trying to slide between definitions and avoid being pinned down. And that is when I knew I was just going to watch it burn from a safe distance.

    • Re:People still can't answer this question: (Score:4, Funny)

      by youngone ( 975102 ) on Sunday March 05, 2023 @08:43PM (#63345551)
      The last time I asked that question on this site, a user told all about how he had been paying for his firewood for years using bitcoin, so it looks like it's a currency for people who can't count.

    • Re:People still can't answer this question: (Score:4, Interesting)

      by Powercntrl ( 458442 ) on Sunday March 05, 2023 @09:19PM (#63345609) Homepage

      I just ask the question: What is crypto?

      Mostly, it's a greater fool investment scheme that doesn't go away, because there's a value floor created by demand from the criminal uses of cryptocurrency.

      Basically, we're stuck with it because there's always someone buying it to launder their drug money or pay off their ransomware ransom.

      • I just ask the question: What is crypto?

        Mostly, it's a greater fool investment scheme that doesn't go away, because there's a value floor created by demand from the criminal uses of cryptocurrency.

        Basically, we're stuck with it because there's always someone buying it to launder their drug money or pay off their ransomware ransom.

        Bitcoin is a bearer asset, something that you own because you have possession of it.

        Ethereum is actually pretty hard to use for illegal purposes these days, processing the Ethereum blockchain is controlled by exchanges and stake holders who are domiciled in the USA, and they get letters from the OFAC (a federal agency) telling them that they aren't allowed to process transactions for specified ETH wallets. They comply. So ETH is really controlled by the US Federal government. You might prefer that, but a lo

    • TL DR A very expensive way to calculate mathematical problems that have no real value. Interestingly if it had been put towards calculating PI we might get some use out of it. It's rife with flaws and risk https://www.forbes.com/sites/q... [forbes.com]. Everybody hates central banks till they go to a competing currency and loose all their money. Crypto currency appears to be on the face of it a replacement for FIAT currency https://cointelegraph.com/news... [cointelegraph.com]. A public stock has to follow SEC regulations and rug pulling

  • No regulation? (Score:4, Insightful)

    by wakeboarder ( 2695839 ) on Sunday March 05, 2023 @09:21PM (#63345615)
    Crypto companies don't want regulation because what they do is shady. But there are enough people that have been ripped off that will call for it. If I were a crypto exchange customer, the first thing that I would want is a guarantee that my money would remain mine

    • If I were a crypto exchange customer, the first thing that I would want is a guarantee that my money would remain mine

      FTX guaranteed it.

      But it turns out people can say anything without meaning it.

    • Well, fork the dough over. I promise and pinky swear that it remains yours.

    • Crypto companies don't want regulation because what they do is shady. But there are enough people that have been ripped off that will call for it. If I were a crypto exchange customer, the first thing that I would want is a guarantee that my money would remain mine

      But it is regulated.
      https://www.youtube.com/watch?... [youtube.com]
      OFAC get to say what transactions get processed for what wallets in Ethereum and, most likely, other proof of stake coins.

      • Regulated by the SEC

        • Regulated by the SEC

          Thats the thing, the SEC wants to treat 'proof of stake' crypto as securities, thus guaranteeing that they will be driven out of the USA.
          But the OFAC wants to use the fact that most 'proof of stake' crypto is effectively domiciled in the USA and thus can manipulate their blockchains by applying pressure to the 'stake holders'.
          Its like the USA wants to have its cake and eat it too... Not altogether surprising given the vast VAST arrogance of the USA eh.

  • Time to pack the Siberian Parachute, better make sure its in there properly and ready to go.

  • OK, not your mom'n'pop grocery store, but every big US company plays around with acquisitions, shell companies, etc. For example, that's part of how they avoid taxes: by pretending to be independent, and playing licensing games to put the profits in the right country. US companies also do this to avoid following laws they don't like, while still doing business through their "independent" subsidiary.

    But when non-US companies play the same games, to avoid US jurisdiction? Suddenly this is evil. Typical US hy

    • Re:Every company does this (Score:5, Informative)

      by test321 ( 8891681 ) on Monday March 06, 2023 @08:47AM (#63346467)

      The companies you describe essentially try to minimize their own taxes. What Binance is reportedly doing is try evade bank regulations. I'm not saying either is good, but they are not the same thing. Do you have an example of a bank from US or other western nation doing the same as Binance? Using a shell company to enable selling financial products that are (going to be) prohibited or severely regulated.

      • I don't have an example of US companies doing this to avoid banking regulations, but plenty of big IT companies try all sorts of games to avoid being subject to the GDPR. So they set up servers in Europe - great. But the US company has full access to the data - and almost certainly makes use of it.

        • I don't have an example of US companies doing this to avoid banking regulations, but plenty of big IT companies try all sorts of games to avoid being subject to the GDPR. So they set up servers in Europe - great. But the US company has full access to the data - and almost certainly makes use of it.

          Its just like TikTok, except the USA instead of China. And money instead of videos.

  • The entire crypto "economy" is propped on Tether. It's smoke and mirrors all the way down; there's very little real money circulating in this system. It's only a matter of time until we get liquidity run for the ages.

    Remember, Tether is a company reportedly managing ~$72bn in hard assets... which is also apparently unable to open a bank account anywhere.

  • That yet another cryptocurrency company is revealed to be a joint run by a bunch of crooks is par for the course. What would be news is a cryptocurrency company run by honest, law-abiding individuals.
  • If you are going to do these sorts of things, don't create hard evidence of it.

  • That crypto was and is a scam? And the whole idea was to avoid taxes, as well as screw the marks?

  • Lies about decentralization, exploitation in the absence of modern financial regulations that exist to prevent bs, I can't believe people bought into this nonsense.

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