Binance (BNB-USD) is having a whiplash 2023. The year has marked the start of a massive outward expansion, embracing artificial intelligence (AI) technology and completing acquisitions to continue lining the company’s balance sheets. But, on the flip side of this new growth stage are a lot of growing pains. Legal trouble is being compounded now with damning evidence of the company looking to deliberately undermine regulators in the U.S.
To say Binance and the U.S. government have a fraught relationship would be a severe understatement. The relationship between the two has been outright venomous. In trying to rein in the crypto industry, the government has put the company in its sights as its most prominent target. Being the largest crypto company in the world, this makes sense.
The Securities and Exchange Commission (SEC) has been probing Binance, and its U.S.-based sister-company Binance.US, since 2020. The regulator’s focus is on the platform’s launch in 2017. One of the things the SEC is looking for is evidence that Binance has control over Binance.US — something which Binance has refuted aggressively.
Enter the Wall Street Journal’s Blockbuster Report
However, this week, the Wall Street Journal published a blockbuster report which uncovers internal communications contrary to Binance’s claims. The report unveils text messages between Binance and Binance.US developers implying closer control by the former over the latter than previously claimed. It also digs up Binance presentations pitching Binance.US as a way to “insulate Binance” from U.S. regulators. Insider documents also show alleged proof that CEO Changpeng Zhao had — at least at the time of Binance.US’s launch in 2019 — maintained control over Binance.US parent company BAM Trading.
Other texts show Zhao exploring ways to secretly maintain Binance’s largest U.S. customers while publicly stating that the exchange does not accept U.S. customers.
Binance Report Blows Open Implications for SEC Probe
The report is a painfully obvious smear on Binance right now, and it couldn’t have come at a worse time for the company. Currently, it’s diverting lots of resources into a courtroom faceoff with regulators trying to bar its Voyager Digital acquisition. It’s also scrambling to mitigate the damage from a regulatory ban on the platform’s flagship stablecoin.
As stated earlier, the SEC is amid a long and far-reaching probe into Binance’s business. Its 2017 BNB offering is being investigated as a potential unregistered securities offering, and its listing of many other assets since then.
One of the top priorities for investigators has been setting straight whether the company has been pulling the strings at Binance.US or if the company really is a separate entity. Since Binance is an unregistered entity in the U.S., proof of this would allow regulators far greater access to scrutinize the global company than ever before. This report by the Wall Street Journal thus blows the investigation wide open.
On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.