A Deep Dive Into The Troubles Brewing In The Drama-Ridden Crypto Exchange

4 min readSep 6, 2021

Binance has been going through a lot of problems. Let’s take a look at what is happening here.

What’s New?

Binance, which operates the world’s biggest bitcoin exchange, and altcoin crypto exchange in the world by volume, said that it will stop providing some products in Singapore. The company, in a blog post, said that it would be stopping Singapore dollar trading pairs, and payment options, as well as, removing the app from Singapore iOS, and Google Play stores as of Friday.

Binance also said that they are not operating any official Telegram or online communications channels in Singapore. The firm added that it is committed to working constructively in policymaking “that seeks to benefit every user.” Users have been advised to complete all related peer-to-peer trades, and remove related trade advertisements by Thursday, “to avoid potential trading disputes.”

Why This Happened?

This move by Binance came after the Monetary Authority of Singapore (MAS), which is Singapore’s central bank that oversees the country’s crypto industry, sent a notice to cease trading in Singapore dollars.

MAS said that it had analysed Binance.com’s operation, and is of the view that Binance, the operator of Binance.com, may be in breach of the Payment Services Act. The Central Bank said that Binance.com could be breaking the law by offering payment services to Singapore residents without an appropriate licence.

Troubles Continue

Binance has been running into trouble with regulators for some time. It became the focus of many other regulators worldwide, including those in the U.K., Netherlands, Thailand, Malaysia, Japan, Germany, Hong Kong, Lithuania, and South Africa. Earlier in March, Bloomberg reported that the company was under investigation by the U.S. Commodity Futures Trading Commission. The regulator was looking to determine whether cryptocurrency derivatives were bought and sold by U.S. citizens on the Binance platform.

Then in April, FT reported that, Germany’s financial watchdog, BaFin warned investors that Binance, has likely violated securities rules over its launch of trading in stock tokens. The watchdog said that the tokens tracking the movement of shares in Tesla, Coinbase, and MicroStrategy represent securities needing a prospectus that has not yet been issued.

Later in May, Bloomberg wrote that Binance is under investigation by the Justice Department and Internal Revenue Service to root out illicit activity that has flourished in the crypto market. Sources told Bloomberg that, as part of the probe, officials who investigate money laundering, and tax offences have sought information from individuals with insight into Binance business.

In June, the Financial Conduct Authority (FCA) published a warning about doing business with Binance’s UK firm, Binance Markets. U.K.’s finance regulator noted that no entity in the Binance Group holds any form of UK authorisation, registration or licence to conduct regulated activity in the U.K. In early July, Barclays suspended UK card payments to Binance, quoting the FCA warning to customers. Followed by that, SEPA payments to Binance were stopped, and the exchange brought a new compliance director on board.

Last month, Binance was ordered by the London High Court to track the perpetrators of a $2.6 million hack. In June, Fetch.ai said that hackers stole the assets from its Binance account before selling them at a fraction of their value less than an hour later. So, Fetch.ai requested Binance to identify, and freeze the accounts of hackers granted.

For The Investors

We all know that cryptocurrencies are unregulated, and highly volatile. They are also under severe regulatory pressure in several countries. Meanwhile, crypto exchanges go through a lot of troubles as well. They are often victims of hacks, as well as, technical glitches, and investors get caught in the midst, and lose a lot of money.

One such example is a major outage that happened in Binance in May. Binance witnessed a major outage on May 19, and on the same date, Bitcoin, and Ethereum logged their biggest one-day drops since March 2020. The crypto market lost approximately $1 trillion in value that day. Since the exchange experienced an outage, investors were unable to get out of their positions. According to CNBC, hundreds of investors are anticipated to take part in arbitration proceedings against Binance, asking for damages for the money they lost when Binance went offline.

However, the problem here is taking a company to court, which doesn’t even have a headquarters. David Kay, chief investment officer of Liti Capital, told CNBC, “…They have no home, they have no headquarters, they have no office.” Kay added, ““The only place where Binance has said they have jurisdiction is in a Hong Kong international arbitration court.” So, we can see how it is difficult for investors to get any kind of compensation from Binance. Since the exchange doesn’t have an office, taking any legal action against the company becomes extremely difficult for investors.

Zooming Out

Binance has experienced tremendous success over the past few years, thanks to the little regulatory oversight on the crypto industry. As interest about cryptocurrencies grow among people these days, transactions in these exchanges will continue to grow as well. However, it is still a big question on what will happen if the investors lose money because of hacks or technical glitches, and will the exchange compensate the amount. Also, if the exchanges are not ready to do it, where can investors go and get their money back.

This also presents another question: When will governments and regulators come up with a law or a bill to regulate the cryptocurrency market? Because the longer this market remains unregulated, there is a high probability that it will continue to present more problems for investors and governments alike. Since the market is heating up, we might see regulators coming up with guidelines for crypto exchanges, and the industry in the near future. But until then, we have to be cautious while trading in these volatile assets.




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