You might be asking yourself ”Why is Binance under investigation?” The FTX fiasco is impacting the cryptocurrency industry, and now cryptocurrency exchanging site Binance is under the radar of investigations.
Everyone was shocked by the collapse of this cryptocurrency exchange, which had a value of $32 billion in February.
On November 11, FTX filed for Chapter 11 bankruptcy because it could not pay the demands of its concerned clients. Regulators have now started looking into Sam Bankman-Fried’s business as a result.
The world’s largest cryptocurrency exchange by volume, Binance, is the subject of an inquiry, according to a recent announcement from the Singapore market regulator. On November 8, Binance committed to purchasing FTX; however, the next day, it withdrew its offer.
Binance is allegedly breaking laws governing payment services.
On November 21, The monetary authority of Singapore stated :
“The Commercial Affairs Department initiated the investigation against Binance for suspected breach of the Payment Services Act.”
The regulator mentioned the investigation in response to inquiries about whether it was treating Binance.com and FTX differently.
Why is Binance under investigation?
The inquiry by the Singaporean authorities comes as Changpeng Zhao, the CEO of Binance, is establishing himself as the new ruler of cryptocurrencies following the fall of Bankman-Fried.
Zhao made a notable announcement about establishing a fund to assist cryptocurrency businesses that would run out of money due to their exposure to FTX. He still hasn’t given any information about this fund.
Between January and August 2021, according to the regulator, Binance was the subject of several complaints. Additionally, during that time, Binance’s unlicensed consumer solicitation was reported in a large number of regions. The Singapore financial authority cited Binance for soliciting Singaporean users without a permit.
“While both Binance and FTX are not licensed here, there is a clear difference between the two, Binance was actively soliciting users in Singapore while FTX was not. Binance in fact went to the extent of offering listings in Singapore dollars.”
“With regard to FTX, there was no evidence that it was soliciting Singapore users specifically. Trades on FTX also could not be transacted in Singapore dollars. But as in the case of thousands of other financial and crypto entities that operate overseas, Singapore users were able to access FTX services online.”
It stated that Binance has to avoid luring users from Singapore. As a result, the business implemented several controls, such as geo-blocking Singapore IP addresses and removing its mobile app from Singapore app stores.
“These measures were intended to demonstrate beyond doubt that Binance had ceased soliciting and providing services to Singapore users. Should Binance decide now to dismantle some of these restrictions, it has to continue to comply with the prohibition against soliciting Singapore users without a license.”
Binance chose not to respond. A spokeswoman on TheStreet told:
“Due to confidentiality obligations, we are unable to comment on this.”
The investigation is not specifically tied to FTX, but it demonstrates the pressure regulators are applying to the cryptocurrency industry as scandals mount, resulting in enormous losses for small and major investors.
Now you know why Binance is under investigation. Is the FTX case just the tip of the iceberg? Stay tuned to stay up to date with developments in the Binance wing. To learn more about how FTX crashed, you can read our article titled How did FTX collapse: What happened to FTX crypto? or if you are wondering what is the current situation in the FTX lawsuit check out: FTX class action lawsuit explained