Disclosure about the ‘monster’ of the Binance cryptocurrency: 14 branches in the world are just ‘shell companies’, the CEO can’t say the name of the audit unit, more suspicious than FTX

Tram Ho

Tiết lộ động trời về 'quái vật' tiền số Binance: 14 chi nhánh trên thế giới chỉ là ‘công ty vỏ bọc’, CEO không nói được tên đơn vị kiểm toán, đáng ngờ hơn cả FTX - Ảnh 1.

Reuters has just published a special article, giving an analysis of the world’s largest cryptocurrency exchange Binance. Accordingly, Reuters has discovered that there are many mysteries surrounding Binance’s business.Here is part 2 of the translated article from Reuters.

MYSTERIOUS MYSTERIES

Zhao and other executives have repeatedly refused to disclose the name of the entity that actually controls the main exchange. However, in a 2020 court hearing, Chief Compliance Officer Samuel Lim said that they are owned and operated by a Cayman Islands company called Binance Holdings Limited.

This year, Binance has obtained licenses or approvals from authorities in locations including France, Spain, Italy, and Dubai. Zhao celebrated the move, saying in May that Binance’s registration as a crypto service provider in Italy would allow it to operate “completely transparently”. However, none of them provide a clear view of the main exchange.

Reuters asked authorities in 14 places about the management of local branches of Binance. Of the eight that responded, six in Spain, New Zealand, Australia, Canada, France and Lithuania said their role was not related to overseeing the main exchange and said the affiliates only are required to meet local requirements for reporting suspicious transactions.

Tiết lộ động trời về 'quái vật' tiền số Binance: 14 chi nhánh trên thế giới chỉ là ‘công ty vỏ bọc’, CEO không nói được tên đơn vị kiểm toán, đáng ngờ hơn cả FTX - Ảnh 2.

WeWork Madrid – where Binance Spain registers its business address.

Reuters also asked representatives at Binance branches about their relationship with the main exchange. Only one respondent was a South African company called FiveWest. The company’s director, Pierre van Helden, said that it receives a “minimum annual license fee” from Binance to facilitate cryptocurrency derivatives trading for Binance’s South African users.

“How Binance operates globally is something we don’t know,” van Helden said.

In Italy, Binance’s public company filings only detail the unit’s capital base and its ownership by a separate Binance company in Ireland. The Italian company, Binance Italy SRL, has an address listed in a row of shops and apartments south of Lecce. They did not respond to a Reuters request.

Only two of the Binance units analyzed by Reuters provide more significant details in their filings.

One is a company in Lithuania called Bifinity UAB. The company describes itself as the “official money-to-crypto payment service provider for Binance” (coins here include dollars, euros, and a few other traditional currencies).

Bifinity also revealed that Binance and its companies “are key strategic business partners.” In 2021, Bifinity reports a net profit of $145 million and assets of €816 million. Bifinity has an annual report with 147 employees. Bifinity said it paid 421 million euros to a single related party, with about 185 million euros listed as “related expenses,” but did not specify whether the party was Binance.

It is worth mentioning that this company does not have a website or publicly provide any contact details. The company’s CEO, Saulius Galatiltis, did not respond to a request for comment. The company’s registered business address is in a business district in the Lithuanian capital Vilnius, but Bifinity is not listed as tenants.

Another Binance branch that provides more financial information is in Spain. The company registered in July with the Central Bank of Spain and reported meager sales of around 1.5 million euros last year and a profit of just 9,000 euros. Reuters was unable to contact anyone from this unit. A reporter visited the company’s registered address, which is a co-working space in Madrid. The receptionist said a small team from Binance Spain moved out a month ago, but did not leave contact details.

In the Gulf, Biance also has licenses this year in Abu Dhabi, Bahrain and Dubai. Binance’s Dubai filings do not detail any financial activity or affiliation with the parent exchange. Even the employees inside the company are not clear about these details.

According to a source, Binance did not disclose global profitability figures during its application for a license in Dubai. Nearly all customers in the United Arab Emirates are registered with Binance’s main exchange. In addition, until at least the end of last summer, the licensed Dubai branch had almost no significant transaction revenue.

Reuters was unable to contact the entity called Binance Fze. The company has a registered business address at a WeWork office in Dubai World Trade Centre. Binance’s head of the Middle East and North Africa region did not respond to a request for comment. So is Dubai’s digital asset regulator.

NO MONEY, NO DEBTS AND NO NEED FOR TRANSPARENCY OF INFORMATION

Many crypto exchanges including Binance’s rival Huobi and OKX have operated overseas such as the Seychelles or like FTX in the Bahamas. Standards for corporate transparency and financial reporting in such places are often not as clear-cut as in the United States.

Coinbase – the largest US exchange to list on Wall Street in 2021. Like many other public companies, they must file quarterly audited financial statements and annual financial statements. In its latest report, Coinbase reports data including revenue, profit, ownership, and trading volume.

Tiết lộ động trời về 'quái vật' tiền số Binance: 14 chi nhánh trên thế giới chỉ là ‘công ty vỏ bọc’, CEO không nói được tên đơn vị kiểm toán, đáng ngờ hơn cả FTX - Ảnh 3.

“Coinbase is a publicly traded company and requires information to be shared with investors whereas we are a private company and do not have public investors,” Hillmann said. “The main reason for an IPO is to raise money but Binance does not need the money, there is no need for an IPO at this time.”

Coinbase spokesman Elliott Suthers said that the company’s financial position is reviewed quarterly by Deloitte, one of the largest auditing firms in the world. “We believe that exchanges have a responsibility to share finances with their customers. We encourage other exchanges to take a similar approach.”

Some private exchanges disclose financial data during fundraising as FTX did before the crash. However, Binance hasn’t raised money from outside investors since 2018. “We don’t have any venture capital so we don’t owe anyone any coins,” Zhao said.

As part of its “commitment to transparency,” Binance last month posted on its website a “snapshot” of their holdings in six major tokens and pledged to share a full future… unspecified data.

Data firm Nansen says that this stake, worth about $70 billion at the time of the November 10 screenshot, has now dropped to $54.7 billion as of December 17. The two main stablecoins are Binance’s BUSD and Tether accounts for half of the above holdings. About 9% of their assets are BNB, a token issued by Binance itself.

BNB is currently the 5th largest cryptocurrency in the world by market value – about $40 billion. The holders of this token get reduced transaction fees on the exchange. Zhao said that Binance does not use BNB as collateral. However, Alameda uses FTX’s FTT token as collateral when borrowing money from FTX and other lenders.

Zhao said during a conference in April that Binance is “fully audited.” But when asked by a Financial Times reporter who audits Binance’s financial results, Zhao said the company has “many auditors in many places… I can’t list them all.”

Now Zhao advocates the so-called “proof of reserve” test of crypto exchanges’ holdings. The system is said to allow users to confirm that their holdings are checked against blockchain data and that the exchange’s reserves match customer assets.

Binance hired accounting firm Mazars to check the amount of Bitcoin they own. However, on Friday, their communications director Josh Voulters said that the company has “stopped” testing proof of reserves with crypto companies “because of concerns regarding how reports this is understood by the public”.

In fact, seven analysts, attorneys and accounting experts told Reuters that while this checking system provides a level of insight into an exchange’s reserves, it cannot change substitute for a full audit. Two people claim it can’t deliver the level of corporate financial detail that a traditional audit would.

“In terms of Binance’s balance sheet, it’s really sketchy,” said analyst Todaro.

Source: Reuters

Share the news now

Source : Genk