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The Binance CEO vigorously defended the company's KYC/AML practices, dismissing reports of an investigation
Shortly after a Bloomberg report on Friday that cryptocurrency exchange Binance was under investigation for permitting US residents to place unlawful trades, Binance founder and CEO Changpeng Zhao (better known as CZ) dismissed the reports during a live AMA on Clubhouse, saying that the report had âno teeth.âÂ
âThis is a topic that just came up, literally like a few minutes ago or a hour ago,â said CZ. âSo number one, the news article said there was no, I donât have it in front of me, there was no âmisconduct,â I have to dig it up. So number one there was no report of misconduct from Binance, so the report kind of defeated itself.â
CZ noted that as a business Binance maintains a âno commentâ policy on communications with regulators, which places the company in a difficult position with regards to rebutting the contents of the report, which cited a single anonymous source.
An investigation does not mean that âtheyâre trying to charge us, trying to do something with us,â and that the report could simply be a routine communication, he said.
Without citing examples, CZ said that similar instances of what he characterized as miscommunications have happened in the past, and that the âstory doesnât have any teeth.â
He also notably alleged that âself-perceived competitorsâ might bribe or pressure journalists to publish stories heavy on allegations and short on content.Â
CZ has had a complex relationship with the media over this last year. Earlier this month, Binance quietly dropped a defamation lawsuit against Forbes and two of its journalists.
âWe maintain a very collaborative posture with all agencies around the world, not just the US. We have an active dialogue with regulatory agencies,â he added.
Cracks in the geofence
The reports that the CFTC is investigating whether or not US users placed illegal trades on the exchange perhaps shouldnât come as a surprise, given that as recently as November last year he admitted that US traders find âintelligentâ ways to circumvent the ban.
This morning, however, CZ vigorously defended Binanceâs KYC/AML policies.
âI can comment publicly that Binance probably has the strongest KYC/AML program in the industry,â he said. â[...] We do very careful, very strict KYC/AML. We also use very intelligent geofencing.â
He added that the company often accidentally âmislabelsâ travelers to the US, claiming that the standards are often âtoo strict.â
However, he also admitted once more that US users often try to circumvent the systems in place, and noted that the quality of their barriers have to âimprove.âÂ
Ultimately he struck a hopeful tone that industry players and regulatory agencies can find common ground.
âRight now thereâs kind of a gap between the industry players and the regulators. I want to see, hopefully, both sides extend their hand and bridge that gap.âÂ
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