UK’s financial regulator has termed Binance as “incapable of being supervised,” adding that the cryptocurrency exchange posed a significant risk to investors in the UK.
The financial regulator put out this statement after Binance did not respond to repeated queries by the regulator.
Binance Not Providing Any Information
The UK Financial Conduct Authority (FCA) made these observations in an 11-page notice published on Wednesday. The notice outlined the uncooperativeness of Binance Markets Limited, a London-based affiliate of Binance, stating that it had not supplied any information about its services or products despite repeated requests.
The notice further stated,
“This is of particular concern in the context of the firm’s membership of a global group that offers complex and high-risk financial products that pose a significant risk to consumers.”
Responding to the FCA’s first inquiry about its business operations, Binance said:
“We do not consider these questions as appropriate, or in any way relevant to Binance Market Limited’s application.”
Binance further added that its exchange operates outside of the UK, and therefore does not fall under the UK regulations regarding money laundering, transfer of funds, or illegal financing.
A Problematic Situation
Binance’s is not based out of the UK, which is an added problem for the UK regulator, with citizens in the UK still able to trade cryptocurrencies and other crypto products through the main exchange. The FCA observed,
“The FCA considers that the firm’s responses to some questions amounted to a refusal to supply information and that the firm has failed to respond adequately to the FCA’s information requirements.”
Problems Keep Mounting For Binance
Regulators in several countries have issues with Binance. Founded in 2017 in China, the firm has a significant presence online and is domiciled in the Cayman Islands. However, the fact that the firm is mostly present only online is something that regulators have always had an issue with.
In June, the FCA banned Binance’s UK-based marketplace from conducting its business and other activities without prior written consent. The FCA also warned any investors to be wary of any tall promises of significant returns on investment.
The regulator also pointed out Binance’s lack of approved senior officials, along with its stock tokens that the exchange stopped offering only a few months after launch.
Under Increased Scrutiny
Binance has been under Increased scrutiny in several jurisdictions and has been subject to several warnings and restrictions. It has also been banned from operating in some areas as it failed to register with local regulators.
Binance currently faces scrutiny in Canada, Thailand, Germany, Japan, and several other countries, while it is under investigation by the IRS and the Department of Justice in the US.