UK Regulators Criticize Binance for Non-Compliance
The dire straits leading crypto exchange, Binance, has found itself in are far from over. Its woes continue this week after a short period of respite, as the UK Financial Conduct Authority has spared no words in declaring that the exchange cannot be ‘regulated.’ The FCA did not stop there, but added that Binance’s products posed high risks to investors, especially those in the UK.
These scathing remarks have come at a time when Binance pledged to cooperate with regulatory bodies in licensing its activities. The exchange’s resolve was as a result of the pressure it faced from regulators across different jurisdictions between June and July. In light of the latest comments from the UK FCA, it seems Binance and its services are officially blacklisted in the UK. It had initially discontinued activities within the country following directives from regulators.
Binance Cannot Be Supervised, Says UK FCA
According to the FCA’s submission, Binance is incapable of being adequately monitored. In the notice issued to Binance, the UK FCA ordered the exchange to cease its operations which were initially approved in April 2018, which includes offering advisory services and dealing in investment products.
Furthermore, the regulatory powerhouse told Binance to show, across its website and social media pages, its final decision which outlawed the exchange’s operations in the UK. Binance was likewise ordered to take down ads promoting its activities within the country while providing written evidence of its compliance with the above directives.
As noted by the Financial Conduct Authority, restrictions were placed on Binance on three grounds. They include; unlicensed activities, not meeting the Effective Supervision Threshold Condition and lastly, not providing enough cover to protect investors. The UK FCA also stated that Binance had not demonstrated that it had measures in place against money laundering and terrorism financing.
Binance has been in the spotlight for defaulting on regulations, prompting a trajectory on the exchange’s decision over regulations. Until then, regulators in the Cayman Islands, Canada, South Korea, the US, hounded Binance for operating without license. However, at a press conference earlier in August, Binance assured its millions of users of compliance. At the height of its regulatory travails, Binance’s CEO, Chanpang Zhao (CZ) noted that compliance is a journey.
Futures Traders Initiate Lawsuits Against Binance
Meanwhile, Binance is still the subject in about two ‘class actions’ initiated by some of its users in light of the substantial losses incurred by them during a series of system failures on its platform. The first suit was initiated by a group of traders in Italy, while the second was from different futures traders across various jurisdictions.
The issue drafted out in the second lawsuit was for losses on ETH futures. An Arab trader had lost over $6 million during one of the outages in April. All the affected parties claimed that Binance had offered them ridiculous compensation packages. As part of its decision to begin compliance, Binance introduced compulsory KYC requirements last week. To also protect investors to volatility risks, it lowered the leverage options available to traders.
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