A new investigation in China shows that employees of cryptocurrency exchange Binance are allegedly aiding users in circumventing security protocols mainly the Know-Your-Customer (KYC) system.
Since the FTX crisis, Binance, the largest cryptocurrency exchange in the world, has made great steps to be an industry leader in terms of openness. Yet, a fresh study suggests that Binance insiders assist users in circumventing security mechanisms.
According to a CNBC investigation, Binance staff and volunteers allegedly assisted Chinese consumers in evading the exchange’s Know Your Customer controls (KYC).
More than 220,000 individuals are enrolled in Binance’s official Chinese-language chat rooms, according to the report. There, individuals are purportedly able to access shared communications by circumventing the KYC, residency, and verification measures of the exchange.
These communications purportedly originated from accounts identifying as Binance staff or trained volunteers with the moniker “Angels.”
Methods such as faking bank documents, attesting phony addresses, and other simple system manipulations were shared. A spokesman for Binance is quoted as saying:
“We have taken action against employees who may have violated our internal policies, including wrongly soliciting or making recommendations that are not allowed or in line with our standards.”
Changpeng Zhao, the co-founder of Binance who is typically active on social media, has not commented as of the time of writing. Zhao has denounced misinformation disseminated on the Chinese WeChat platform via Twitter.
While China continues to execute a rigorous ban on cryptocurrencies, which began in 2021, and crypto exchanges in 2017, this trend emerges. If discovered, Chinese individuals who circumvent KYC requirements to access Binance could face penalties.
Others have urged the Chinese government to reconsider its prohibition on cryptocurrencies, but regulators have remained unmoved.
The digital yuan, a central bank-issued digital currency, is being developed rapidly by Chinese authorities. Recent adoption initiatives have cost millions.
