Binance is the biggest crypto exchange in the world by volume and many people think it is also a safe place where to store their crypto assets. 3 months ago FTX was also considered to be “safe”. Then witdrawals were paused and investors lost billions. Can the same thing happen with Binance?
Who is behind Binance?
Let’s start with a simple question – which company is behind Binance?
Binance (Services Holdings) Limited, a company registered at 6th Floor, South Bank House, Barrow Street, 4 Dublin, Ireland, is the data controller for personal information collected in connection with provision of Binance services in Europe.
However, depending on your place of legal residence certain other Binance entities could be involved in processing activities such as Know Your Customer (“KYC”) activities which are necessary for us to provide Services to you. For example, if you are resident in France, Binance France SAS, is responsible for running KYC checks. These Binance entities could act as Controllers of your personal information and use it in accordance with this Privacy Notice.
But the Ireland company is only 1 year old, and looks like an empty legal entity, using the same address as their legal partner Mason Hayes & Curran that set this company up.
“The company documents list the place of business for the Binance firms as an accountancy office above an athletics shop at a small, nondescript building on Dublin’s southside.
Binance (Ireland) Holdings, which was established last year, currently lists Mr Zhao’s residential address as being in Malta and confirms that he is a Canadian citizen.“
Source: Global crypto trading giant Binance expands Irish corporate network
Binance Operators refer to all parties that run Binance, including but not limited to legal persons (including Binance UAB), unincorporated organizations and teams that provide Binance Services and are responsible for such services. For convenience, unless otherwise stated, references to “Binance” and “we” in these Terms specifically mean Binance Operators.
UNDER THESE TERMS, BINANCE OPERATORS MAY CHANGE AS BINANCE’S BUSINESS ADJUSTS
ADDITIONALLY, THE SCOPE OF BINANCE OPERATORS MAY BE EXPANDED DUE TO THE PROVISION OF NEW BINANCE SERVICES, IN WHICH CASE, IF YOU CONTINUE TO USE BINANCE SERVICES, IT IS DEEMED THAT YOU HAVE AGREED TO JOINTLY EXECUTE THESE TERMS WITH THE NEWLY ADDED BINANCE OPERATORS.
IN CASE OF A DISPUTE, YOU SHALL DETERMINE THE ENTITIES BY WHICH THESE TERMS ARE PERFORMED WITH YOU AND THE COUNTERPARTIES OF THE DISPUTE, DEPENDING ON THE SPECIFIC SERVICES YOU USE AND THE PARTICULAR ACTIONS THAT AFFECT YOUR RIGHTS OR INTERESTS.
Binance business is operated by so called “operators“ – and they might consist of legal persons and also unincorporated organizations and teams. And these operators might change. But Binance is not providing a list of these operators, so you have no idea who you are dealing with, and which “operator” is responsible for what, and where he/she or a specific team or legal entity is even located. And the best part – if there is a dispute, you need to somehow figure out on your own – which is the responsible counterparty? Completely insane.
What is Binance UAB?
Who owns Bifinity UAB (previously: Binance UAB)? The only shareholder: CHANGPENG ZHAO with an address from Dubai, United Arab Emirates. Name matches with CEO of Binance:
What about Bifinity CEO Saulius Galatiltis? No mention of him on Binance website and also hard to notice connection with Binance in his profile:
Could this Lithuanian company Bifinity UAB be the parent company of Binance? It had 680 million turnover in 2021, so it is an active company, but it has only 20 employees according to rekvizitai.vz.lt:
So what is this company doing? According to Binance terms:
if you are resident or located in an EEA jurisdiction or in the United Kingdom, then all Fiat Services will be provided to you by Bifinity UAB or
you use any Fiat Services, which involve a debit card or credit card, then (regardless of your residence or location) such the Fiat Services will be provided to you by Bifinity UAB,
Bifinity UAB is not a licensed financial services provider and cryptocurrency exchange and depository services provided by Bifinity UAB are not regulated by the Bank of Lithuania. Bifinity UAB may work in collaboration with regulated third party service providers to offer Fiat Services.
Bifinity UAB is a service provider to Binance that helps with Fiat Services, but it is not regulated itself and instead uses another third party service provider to offer Fiat Services. So Bifinity UAB is just an intermediary and the real service provider is not even mentioned.
And with Fiat Services Binance means bank transfers and credit card transfers – so everything that is related to depositing or withdrawing Fiat currencies from Binance.
Is it possible to find the real Fiat service provider? Let’s try depositing USD. One week ago if I selected USD currency, I had to send a minimum of $100 000, and to a company called Key Vision Development Limited that is from Seyschelles:
Does not sound very trustworthy, but situation went from bad to worse. Right now it is not possible to deposit USD at all, it is removed from options:
What about EUR deposits? They still seem to work and Bifinity UAB is mentioned, but in reality I get asked to wire money to a company called: Paysafe Payment Solutions Ltd, and a bank “Banking Circle” from Luxembourg.
Also I had to agree to more terms where I could find this info:
The Bifinity Digital Wallet is provided by Paysafe Payment Solutions Limited, a company incorporated under the laws of Ireland with registration number 626665. Paysafe Payment Solutions Limited is authorised by the Central Bank of Ireland (CBI) under the European Communities (Electronic Money) Regulations 2011 for the issuance of electronic money and the provision of payment services (reference number C184986). For the avoidance of doubt, please note that – unlike the e-money and payment services which are provided to you by Paysafe Payment Solutions Limited – cryptocurrency services provided to you by Bifinity UAB are not regulated by the CBI.
So the real fiat service provider is paysafe.com – company from Ireland that has following licenses:
By the way, this part seemed interesting: “cryptocurrency services provided to you by Bifinity UAB“. So Bifinity UAB is supposed to provide crypto services to Binance? At the same time The Bank of Lithuania had previously issued a warning to Binance:
Companies that are registered in Lithuania as virtual currency exchange operators are not supervised as financial service providers. They also have no right to provide any financial services, including investment services.
And according to The Bank of Lithuania, Binance enables customers to invest in derivative financial instruments related to crypto-assets (futures and options), contracts for difference (CFD) or crypto-assets linked to securities. These means are considered financial instruments.
Binance Mobile Apps
On Apple Store I could find company name: Binance LTD – but no registration number, no address, so this company could be registered anywhere. And as Seller Binance (Switzerland) AG is mentioned – it operates in the sector «IT services», and has 2 board members: Markus Felix Spillmann, Changpeng Zhao.
On Google Play we get another name: Binance Inc. – again, no more details provided.
Previous locations of Binance?
Turns out – Binance has a history of setting up companies, getting banned and then moving to a new country. With almost 200 countries available, CZ can play a cat and mouse game almost indefinitely:
In 2017, Binance left China, setting up shop in Japan and Taiwan, before heading to Malta—a jurisdiction well known for its lax crypto regulations.
But last year, Malta clarified that Binance is not licensed to operate in Malta. Five months after that, the Malaysia Securities Commission alleged that Binance was operating illegally in the country. At the time, Binance support staff told Decrypt that Binance operations were running just fine in Malaysia.
In 2017, the same year Binance left China, the crypto exchange registered Binance Holdings Limited in Georgetown, Cayman Islands. A corporate linkage document previously seen by Decrypt shows the Cayman Islands as Binance’s headquarters. What’s more, Binance has previously used this address to register several trademarks of the Binance name and logo.
In 2019, Binance also registered the Binance Investments Company in the Seychelles.
Source: Binance CEO CZ Still Says His Company Has No Headquarters
And from a more recent article, situation has not really improved:
CZ still can’t say where Binance is headquartered, but he says the answer is coming soon.
“We have a global holding company, a global holding entity for the centralized exchange,” he said on the latest episode of Decrypt’s gm podcast.
So, where is it? “We haven’t announced it yet,” he said with a laugh. “We will announce that in due time. But it’s very simple. It’s not that complicated.”
- Binance is hiding it’s global holding company (if it exists at all)
- Getting banned in many countries seems to be “business as usual“
- If you as an investor cannot even find the legal company behind the crypto exchange, how likely is that you, police or any lawyers will find any funds that might later go missing? Who will go through all their 50+ legal entities?
- Funds are not safu. If anything happens, you are on your own.
Author: Kristaps Mors, kristapsmors.com