The world’s largest cryptocurrency exchange by volume has suddenly been hit by the regulators in Malta, as they claim that Binance is not licensed to operate in the archipelago.
The company that was initially found in Hong Kong was banned in China back in 2018. Following the Chinese ICO ban, the company opened offices and server locations in South Korea, Japan, Taiwan, and Hong Kong, but its base of operations has been kept a secret. In both Japan and Hong Kong, the company has had to deal with a number of issues with the regulatory agencies in these countries.
The crypto regulations in the EU remain quite strict; Malta has tried to position itself as a crypto-friendly country in a bid to attract many crypto investors to bring their businesses into the country. The decision to move to Malta was taken after the Maltese government passed laws that provided a regulatory framework for businesses operating in the Cryptocurrency and Blockchain industry.
Malta authorities shun Binance
Now, a February 21, announcement from the Malta Financial Services Authority (MFSA) claims that the exchange has not been licensed to operate in the island nation. The statement noted that media publications have been referring to Binance as a “Malta-based cryptocurrency firm,” but the MFSA disagrees:
“Following a report in a section of the media referring to Binance as a ‘Malta-based cryptocurrency’ company, the Malta Financial Services Authority (MFSA) reiterates that Binance is not authorized by the MFSA to operate in the cryptocurrency sphere and is therefore not subject to regulatory oversight by the MFSA.”
The MFSA did stress on the fact that operating a cryptocurrency-related business in Malta requires a license from the agency under the Virtual Financial Assets Act of 2018. However, the prime minister of Malta, Joseph Muscat, had previously tweeted his excitement for Binance’s Malta move. At that time, Binance CEO Changpeng Zhao responded:
The MFSA statement sure looks like a mild warning for Binance, who is no stranger to regulatory lash backs. Previously, the Japanese Financial Services Agency (FSA) had warned the exchange to stop operating in the country without official approval after the company had opened an office in Japan while in the process of trying to receive a license to operate in the country.
CEO says it’s always been this way
As the MFSA statement started to trigger panic within the community, Zhao took to twitter and explained Binance’s situation in a series of tweets stating that the news is “a mix of truth, FUD & misconception.” He went on to emphasize the fact that Binance operates as a decentralized entity stating that:
As per Zhao, decentralized companies do not need to be operating from offices and headquarters. He further wrote:
Binance registered in the Cayman Islands?
Even though Binance continues to be silent about the whereabouts of its primary base of operations. Media outlet Decrypt claims that the exchange is registered in the Cayman Islands and Seychelles, as per the registry offices of each country. Supposedly, back in 2017 Binance registered Binance Holdings Limited in George Town, Cayman Islands, followed by a later registration of Binance Investments Company, in Mahe, Seychelles, in 2019.
A Strange Coincidence?
Amidst all the chaos, one twitter use going by the name ‘Billy’ claims that Binance resides in Malta to “avoid” regulatory hurdles that’d hamper its operations. Surprisingly, this tweet was published a day before the MFSA published its statement. He further claims to have filed an SEC lawsuit against Binance, stating:
This could just be a false threat as the user never revealed any details like the case number, but the timing of the tweet is still uncanny.