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- Binance has temporarily suspended all new users based in the UK from accessing the platform following the termination of its partnership with Rebuildingsociety.com.
- The Financial Conduct Authority recently restricted the ability of Rebuildingsociety.com to approve communication for crypto platforms.
One of the largest crypto exchanges, Binance, has been in the news for the past couple of years over regulatory-related concerns. As CNF rightly reported, the exchange announced its intention to comply with national laws by hiring relevant officers.
In February, it was reported that the exchange had hired Noah Perlman, former chief operating officer (COO) at Gemini as its new Chief Compliance Officer (CCO).
As part of the measures to provide smooth services and ensure that users are adequately provided with the right information before engaging in its services, Binance has temporarily suspended new users in the UK from accessing the Platform.
More Details About the Suspension
The decision follows the recent termination of its partnership with the peer-to-peer lending platform Rebuildingsociety.com. According to reports, this third-party platform was initially contracted to approve communications made to UK-based customers under the new local rules. Unfortunately, the Financial Conduct
Authority recently restricted its ability to approve communications for crypto platforms. On top of that, the company was ordered to retract all approvals by October 11. This implies that new customers from the UK would not be able to access the Binance platform unless this is resolved.
A spokesperson of Binance has reportedly informed the FCA that the exchange is already searching for a suitable and authorized replacement.
Binance is in active discussions with another suitable FCA-authorized firm to approve our financial promotions as soon as possible.
Starting from October 8, the UK’s financial promotions regime was extended to cover cryptoasset service providers irrespective of their location. In this case, platforms are required to show clear risk warnings to consumers based in the UK.
Not only that, they must meet a higher technical standard and ensure that all communications are approved by an FCA-authorized firm. Firms that do not comply would be subjected to unlimited fines, added to the FCA’s public warning list, and possible prison time.
Previous Encounters Between Binance and Regulators
In 2021, the FCA issued a warning to the public that Binance is not regulated to undertake any activity in the UK.
No other entity in the Binance Group holds any form of UK authorization, registration, or license to conduct a regulated activity in the UK. The Binance Group appears to be offering UK customers a range of products and services via a website, Binance.com.
This year, the exchange has also been sued by the US Securities and Exchange Commission as well as the U.S. Commodity Futures Trading Commission (CFTC) for operating an illegal exchange and “shan” compliance program. SEC filed 13 charges against the exchange, accusing the CEO Changpeng Zhao of commingling billions of users’ funds and sending them to another company controlled by him.
Despite announcing that it does not offer services to US customers, the exchange allegedly assisted high net-worth US investors to subvert their controls to access the platform. Between June 2018 and July 2021, Binance allegedly made $11.6 billion in revenue with most coming from transaction fees. SEC believes that Binance “at first overtly and later furtively” enticed US customers despite the federal laws prohibiting unregistered offers and sales of securities.
