UK Regulator: Binance ‘Not Capable’ Of Being Supervised

The UK’s financial services regulator, the Financial Conduct Authority (FCA), has said that crypto exchange Binance has refused to provide basic information about its business, concluding that Binance Markets Limited (Binance’s UK entity) is therefore “not capable of being effectively supervised.”

“The FCA considers that the firm’s responses have been incomplete and have included direct refusals to provide information. These include failures to provide details about how the business and Group are organised,” the FCA said in a supervisory notice. 

The FCA added that the firm has refused to explain what routes UK customers could use to purchase products, and to identify the legal entity that sits behind the Binance website, binance.com. 

Decrypt has also reached out to Binance on eight separate occasions during this month requesting information on how Binance Group is organized. We have yet to receive a response.

The FCA’s supervisory note, dated 25 June 2021, underlines the regulator's frustration with the firm’s apparent unwillingness to provide information. 

“Based upon the firm’s engagement to date, the FCA considers that the firm is not capable of being effectively supervised. This is of particular concern in the context of the firm’s membership of a global Group which offers complex and high-risk financial products, which pose a significant risk to consumers.” 

What do we know about Binance Markets Limited?

Previously BML was known as EddieUK, an authorized investment firm since April 13, 2018. 

Binance acquired the firm in May 2020 and, importantly, inherited the permissions held by EddieUK prior to the firm forming part of the Binance Group. 

According to the FCA, the firm stated its intention to offer regulated activities to customers, but had not done so by the time of the FCA’s original consumer warning on June 26.  

Binance recently told Decrypt that Binance Markets Limited was acquired in order to “own and operate” Binance.UK, intended as a bespoke exchange for UK customers. 

A spokesperson for Binance said that, “As noted by the FCA, Binance Markets Limited has fully complied with all aspects of its requirements. We continue to engage with the FCA to resolve any outstanding issues that may exist.”

The exchange's CEO Changpeng "CZ" Zhao also weighed in on Twitter, posting a link to the FCA’s updated consumer warning about BML. In his tweet, CZ quoted the FCA directly. 

“25 August 2021 update. On 25 June 2021, the FCA imposed requirements on Binance Markets Limited. The firm complied with all aspects of the requirements,” CZ said.