29/06/23

TAX EVASION: Binance Suspected To Be Aiding Money Laundering, Tax Evasion Activities In Ireland And Malta

As published on: thedeepdive.ca, Wednesday 28 June, 2023.

European Union authorities have flagged Binance’s operations in Ireland and Malta, expressing concerns about potential illicit activities such as money laundering and tax evasion. Investigators suspect Binance of obfuscating its accounts and operations across various EU jurisdictions, commingling funds from different countries to evade scrutiny from regulators and tax authorities, as Protos reported.

These concerns arise from the difficulty in tracking Binance’s activities in Ireland and Malta, despite the company’s claim of employing numerous staff members. Official records show that revenue streams remain unexplained or are attributed to vague “consultancy services,” while the companies lack active operational spaces beyond their registered addresses, which they share with other businesses.

Authorities suspect that Binance may be inflating its registered employee headcounts by including freelancers engaged in promotional work, thereby misleading the true nature of its operations. Notably, Binance lacks the necessary license to function as a crypto exchange in Ireland or Malta.

Binance Holdings (Ireland) serves as an umbrella entity that includes several subsidiaries, including Binance (Services) Holdings in Ireland, which controls Binance’s registered companies in Malta.

It appears that Binance chief Changpeng Zhao fully owns the Irish-registered companies.

 

Even before the Securities and Exchange Commission (SEC) charged Binance, financial regulators in several EU jurisdictions had received information requests regarding the company. Additionally, various European countries are independently investigating Binance for potential local misconduct.

Related to its SEC lawsuit, the world’s largest cryptocurrency exchange has recently beefed up its legal team with a former prosecutor at the Department of Justice, sparking rumors that the crypto firm might be facing troubles beyond a regulatory nature.

Binance asserts its presence in several European countries, such as France, Ireland, Malta, Italy, Spain, Cyprus, and Lithuania. Initially, the company planned to establish its European headquarters in Malta, creating two companies for that purpose.

However, it later changed course, forming three additional companies in Ireland and ultimately designating Paris, France as its EU headquarters. Binance received a license to operate as a digital asset provider in France.

Binance’s regulatory issue in the United States has spread to its international markets, particularly in Europe, leading to the departure of several prominent European managers, including key members of the German-speaking team.

Michael Wild, formerly tasked with spearheading Binance’s business in Germany, Austria, and Switzerland, has stepped down as the managing director of Binance companies. Wild, who previously held positions at KPMG and Etoro, chose to part ways with the company after a year and a half. Raphael Zakarias, his co-manager in Austria, has also left the organization. 

Additionally, at the European level, high-ranking executives are taking a break, including Martin Bruncko, who held the position of “Executive Vice President, Europe” at Binance. Bruncko, a former advisor to the Slovak Minister of Finance and a participant in important EU bodies, departed from the company in May.

In recent weeks, other notable departures include Mike Ringer, the Head of Legal (Europe & CIS) based in London, Lynn McConnell, the Director of Compliance Europe in London (since the end of last year), Daniel Trinder, the Vice President of Government Affairs and Policy in the United Kingdom, and Doron Rozenberg, the Head of Marketing DACH in Frankfurt.

Recently, Binance’s Paris headquarters underwent a police raid as part of a Europe-wide investigation into aggravated money laundering.

In the past week, Belgium’s financial regulator ordered Binance to cease its services within the country. Binance is likely to face further legal challenges from other EU nations in the coming months.

In relation to the suit filed by the SEC against Binance, the regulator filed a motion to freeze all assets belonging to Binance.US while pursuing legal action on securities-related charges. Fearing offshore fund transfers and potential record destruction, the regulator sought a temporary restraining order (TRO). 

However, Binance.US’s legal team opposed the complete asset freeze, arguing that it would be akin to a “death penalty.”

The two parties then agreed on a temporary deal that will see that customers assets parked in the crypto firm’s US arm will remain in the country, provided that only local employees have access to customer funds.

 

Tags

Tax Evasion Money Laundering Binance Crypto