Binance users did cryptocurrency-related transactions worth $90 billion in a single month, and in doing so, the world’s largest crypto exchange maintained a strong presence in a market it allegedly left behind when China banned crypto trading in 2021. The transactions made China Binance’s biggest market by far, accounting for 20% of volume worldwide — excluding trades by a subset of huge traders. According to a report by The Wall Street Journal, which cites internal figures and current and former employees of the company, the transactions were mainly made on the firm’s global spot and futures markets.
The findings are remarkable, given that the People’s Republic of China has been cracking down on crypto-related activities since it declared Bitcoin illegal in September 2021. The move was meant to prevent money laundering and destabilize the country’s financial system, but it did not stop traders from evading restrictions through various methods. For example, some Chinese users used virtual private networks to mask their locations and access the exchanges’ sites, while others obtained Dominican passports so they could trade on a platform that’s otherwise blocked in their home country.
Even so, Binance’s ability to facilitate substantial trading volumes despite the ban is a testament to the cryptocurrency’s popularity among Chinese investors. The exchange’s CEO, Changpeng “CZ” Zhao, has repeatedly denied that Binance is based in or operates out of China and has even gone as far as to argue that critics use his place of birth and ethnicity against the company.
However, CZ’s claims do not hold water. The WSJ’s report revealed that the exchange openly discusses China as one of its most important markets. It cites its internal documents and a meeting reportedly led by the chief operating officer. The WSJ says the company has 5.6 million accounts in China, and about a million of them are active. Moreover, its investigations team reportedly collaborates closely with Chinese authorities to identify possible criminal activity by these users.
Despite the ban, the WSJ’s report suggests that China is still a significant market for Binance, and it may become even more critical if regulatory scrutiny intensifies. Earlier this year, the Securities and Exchange Commission sued the company and its founder on 13 charges, including selling unregistered securities and misappropriating customer funds.
As the world continues to embrace digitalization, it is clear that cryptocurrencies will play a crucial role in shaping the global financial landscape. However, with governments worldwide continuing to clamp down on exchanges and ICOs, the need for more transparent and robust regulatory practices will only grow. That is why all stakeholders in the space need to work together to ensure that these new technologies are treated fairly and that the interests of all users are protected. That is the only way to guarantee the industry a safe and secure future as it grows and evolves over time.
