Britain’s financial industry watchdog is once again issuing a warning about Binance’s backdoor re-entry into the country’s regulated financial market. Binance recently launched a payments subsidiary through which it invested in a regulated UK entity, but the Financial Conduct Authority (FCA) says the exchange’s track record makes the deal a big concern.
Binance announcement the March 7 launch of Bifinity, describing it as the exchange’s “official fiat-to-crypto payments provider.” He said Bifinity would benefit from services such as seamless buying and selling of digital assets and merchant payment integrations through plug-and-play APIs.
It’s the tie-up between the newly launched entity (although Bifinity had been operational for months before the March 7 announcement as Binance UAB) and an FCA-regulated company that has the relevant regulator.
Binance announced that Bifnity has entered into a strategic partnership with Eqonex limited (NASDAQ: EQOS), a Nasdaq-listed digital asset company that operates an exchange, digital asset depository Digivault, and Bletchley Park Asset Management unit.
Like FCA revealed in its statement, Digivault is one of the entities registered by the watchdog under the Money Laundering Regulations.
“As a result of the transaction, individuals and entities that are part of the Binance group may have become the beneficial owners of Digivault for MLR purposes,” the regulator said.
As Binance stated in its press release, Bifinity would invest $36 million via a convertible loan with an 18-month maturity. Its initial conversion price is $1.89 per share.
Eqonex revealed more details about the loan and how much control the combination would give Binance in the listed entity. Through Bifinity, Binance can appoint the CEO, CFO, and General Counsel and appoint two seats to the company’s board of directors.
Binance would effectively get a backdoor into the UK payment system with this investment. As revealed by the FCA, this would violate its explicit orders under which it does not allow Binance to engage in regulated activities without written consent from the regulator.
“This requirement was put in place because, in the opinion of the FCA, Binance Markets is not capable of being effectively supervised,” he said.
The regulator further said it was caught off guard and was unable to probe the deal before it closed.
“The FCA had no authority to assess the suitability and ownership of the new beneficial owners or the change of control before the transaction was completed,” she said, further asserting that she had the power to frustrate the agreement.
“The FCA may take action to suspend or cancel the registration of a crypto-asset business if it is not satisfied that the business or its beneficial owner is fit and proper. The FCA also has the power to suspend or cancel the registration of a company’s crypto-assets on a number of grounds, including where a company has failed to comply with obligations under the Money Laundering Regulations. money,” he added.
Asked about FCA concerns, a Binance spokesperson claims that the exchange had noted with interest and “looks forward to continuing the dialogue with FCA.”
Chi-Won Yoon, the chairman of Eqonex, declined to comment on the regulator’s concerns, saying his firm has partnered with the beleaguered exchange because they “share a vision to build a digital asset ecosystem that provides institutions and individuals with safe, compliant and regulated services”. to access.”
This is the second time in less than a month that the FCA has expressed concern over Binance’s attempts to re-enter the UK payments industry, from which it was launched by the watchdog.
As CoinGeek reported in late February, Binance had partnered with Paysafe, a regulated payment processor, which effectively gave it access to the market it was banned from in June last year.
To follow The CoinGeek Crypto Crime Cartel series, which plunges into the flow of groups – one of BitMEX for Binance, bitcoin.com, Blockstream, Metamorphose, Coinbase, Ripple, Ethereum, FTX and Attached—who co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) market players.
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