In 2018, Binance sought to register its exchange and its headquarters in Malta. It set up two companies, Binance Europe Services Limited and Binance Marketing Limited, and began discussions with the regulator (the Malta Financial Services Authority) and the banks to officially register its exchange in Malta. While the government, led by Joseph Muscat was very supportive and encouraging, the regulators weren’t so forthcoming, and Binance even had problems opening a bank account. In fact, initially, Binance had used Trust Pay with a bank account in Slovenian for some of its major payments and money transfers in relation to its Maltese companies.
Changpeng Zhao had put a lot of faith in Malta due to his reception by Prime Minister Joseph Muscat and the Minister for the Economy Silvio Schembri. CZ assumed that Malta would be Binance’s base due to the government’s very strong political will to accommodate him. It didn’t turn out that way. The regulator didn’t need to issue a refusal for Binance’s requests to register its exchange in Malta because Binance didn’t comply with the regulator’s requests to provide basic documentation.
CZ then tried his luck again with Ireland. Ireland is the country where Binance has set up companies that own Malta’s companies. Binance’s companies in Ireland (Binance Holdings) are then owned by a Binance company in New Zealand which is then owned by its mother company in the United Arab Emirates but it is also registered in Lithuania as Bifinity. CZ is the ultimate shareholder of these companies with Guangying Chen representing him as the sole director in many of them. Guangying Chen is a Chinese national registered as a resident in Singapore.
As was expected, the Irish financial regulator didn’t approve of Binance’s requests to register its exchange in Ireland. The finance industry in Ireland is significantly important to the Irish economy and Binance which yet again didn’t comply in providing basic documentation that was requested from it, was seen as very high risk. So, CZ then made a decision to move to France where apparently, the regulator was forthcoming. This is indeed very strange. You would expect Ireland to refuse Binance a license, but Malta? A country that was grey-listed by the Financial Action Task Force? Something is seriously wrong, here if Binance was refused in Malta but accepted in France. In fact, soon after Binance was granted a license by France, its offices were raided by the police and financial investigators. Binance is being investigated in France for aggravated money laundering. Interesting.
Maybe, someone in France received a call from a desk in Washington as he heard the direct tone of the English-speaking bureaucrat, telling him
“What the fuck, Michel?”
Indeed, in 2021 and 2022, the SEC has been sending notices and making calls to every European regulator where Binance has a presence asking them for information. As it happened, some of these regulators in Malta and Ireland, initially responded with a simple answer.
“Binance is not registered to conduct financial or crypto activities in this jurisdiction.”
But the case was not that simple. It wasn’t just about allowing Binance to offer crypto services. Binance is being investigated by the Department of Justice for money laundering on a massive scale, abetting the transactions of terrorist organisations like Hamas and government-backed North Korean hackers, and as of lately even breaking US sanctions on Russia on a massive scale.
The DOJ’s investigation on Binance is no secret and various journalists independent of each other, some of them with direct sources at the DOJ itself, have all confirmed that the DOJ is investigating Binance and an Interpol red notice on CZ will be the outcome before bringing CZ to justice. Meanwhile, CZ is trying to wind down nefarious operations and, leave Europe gradually, while bunkering himself in Dubai: aka Desert Prison. His top executives have jumped ship and CZ has hired new criminal attorneys.
After being forced out of the Netherlands, CZ intends to liquidate the companies he has in Malta, mainly because he doesn’t need them anymore. CZ’s sophisticated layering of companies in Europe was made to hide the real source of origin of the funds they were receiving. With a wide and ambiguous company structure, layered by various companies and bank accounts in various jurisdictions, CZ could move money easily in Europe while concealing the true nature of his activities. Today, this is what investigators in Europe are investigating: the Netherlands, France, Ireland, and Malta all have separate and ongoing investigations on Binance.
As expected, these investigations in Europe are not well-coordinated with each other and this is something that CZ had also predicted. The other jurisdictions in Eastern Europe where Binance has a presence such as Lithuania, offer much less support to ongoing investigations and are not very interested in Binance’s illicit activities, having been so far, willing and knowing caretakers of all the risky and bad stuff that is rejected in Western Europe.
Eventually, it will be the Americans that will take down Binance and CZ, and as of today, only they have the sophisticated capabilities to deal with an international money launderer of the scale of Binance. The result will not be positive for the crypto industry and markets in general. Binance is still as of today, the biggest market for crypto with no alternative exchange that can challenge its position. CZ will also need to make use of his resources to fight off this war against him, and he has plenty of it – but in Tether. Tether is the major stablecoin in the crypto markets and with both Binance and Tether going down together, the crypto markets will change to a very significant degree to the extent of making the FTX bust look like child’s play.
Tether is also being investigated by the Department of Justice, and both Tether and Binance are being investigated by attorneys and prosecutors at the United States New York Southern District Attorney-General’s office – the same prosecutor who is charging Sam-Bankman Fried who in turn is collaborating with the prosecutor on their investigations about the former. Remarkably, the US authorities have been very meticulous and progressive in their build-up to the cases against Binance and Tether, despite the slow progression. Yet, it’s all coming together.
Clarification. Binance’s current Headquarters is in the UAE, Dubai, but it previously sought to make Malta its international HQ not just its European HQ. Eventually, its European headquarters was established in France.
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