Protos has learned from European Union authorities that Binance’s companies in Ireland and Malta have raised various red flags, indicating that the crypto exchange is obfuscating illicit activity such as money laundering and tax evasion.
European investigators told Protos they’re worried that Binance may be faking its accounts and operations in several EU jurisdictions and commingling funds from revenue streams of different countries to avoid raising the eyebrows of regulators and tax authorities.
According to them, these concerns have been raised due to its operations within Ireland and Malta being particularly difficult to track, despite claiming to employ dozens of employees. Revenue streams are unexplained or explained by “consultancy services” according to official records, and the companies don’t have an active and operational space other than their registered address — which are shared with other companies.
In some cases, officials believe Binance is inflating registered employee headcounts by conflating the figure with contractual services to freelancers, whose job is mainly of a promotional nature.
- Binance doesn’t have a license to act as a crypto exchange in Ireland or Malta.
- Binance Holdings (Ireland) seems to be used as a bucket which includes several other companies as its subsidiaries, including another company in Ireland called Binance (Services) Holdings that owns Binance’s companies registered in Malta.
- Binance’s companies registered in Ireland seem to be fully owned by Binance chief Changpeng Zhao (CZ).
Financial regulators in several EU jurisdictions received requests for information on Binance by the Securities and Exchange Commission (SEC) even before the agency charged the crypto exchange earlier this month. But several European countries are conducting their own Binance investigations on suspicions of local wrongdoing.
Binance claims to be operating in various countries in Europe, including in France, Ireland, Malta, Italy, Spain, Cyprus, and Lithuania. In 2018, Binance announced that it was to set up its European headquarters in Malta and set up two companies. Then it changed track and set up three other companies in Ireland, announcing its European headquarters would be there. Eventually, it settled on Paris, France for its EU HQ and received a license to act as a digital asset provider in the country.
Earlier this month, Binance’s headquarters in Paris was raided by police in a European-wide investigation over aggravated money laundering.
Last week, Belgium’s financial regulator ordered Binance to stop its services in the country. Binance is expected to face more legal challenges with other EU countries in the coming months.