Binance employees tell users how to evade the crypto ban in China and support volunteers

By volume and assets, Binance is the largest cryptocurrency exchange in the world. In 2021, it processed trades totaling $9.5 trillion. Nevertheless, it isn't intended to be permitted to operate in China, where cryptocurrency trading was outlawed in 2021.

Changpeng "CZ" Zhao, the founder of Binance, has praised the exchange know-your-customer (KYC) procedures as a $1 billion investment. These are intended to, among other things, prevent users from accessing the platform, such as people from China.
Yet, posts in Binance's official Chinese-language chatrooms demonstrate that users frequently circumvent Binance's filters to mask their country of residence or origin.

Hundreds of conversations from a Discord server and a Telegram channel run and managed by Binance were obtained, translated, and evaluated by CNBC. These groups had more than 220,000 individuals registered, and anyone who joined and registered could view them for free. There were no access restrictions up until the end of March, which is how CNBC was able to examine texts from 2021 to 2023.

The messages CNBC analyzed were posted by users claiming to be either Angels or Binance employees. They discussed methods in these communications for getting around Binance's KYC, residency, and verification processes.

Some of the methods that staff members and volunteers have discussed entail providing fraudulent information, such as forged bank documents or addresses. Others merely involve system manipulation on the part of Binance.

Workers, volunteers, and clients also distributed video tutorials and written materials that demonstrated how mainland people might lie about where they lived to get a Binance debit card, which would effectively convert their Binance crypto ban into a standard checking account.

Regardless of the approach, Chinese users of Binance assume a high risk: Since 2017, both cryptocurrency exchanges and the currency itself have been forbidden in China. Some items that Chinese citizens want access to are likewise prohibited by Chinese legislation.

The effectiveness of Binance's anti-money laundering initiatives is also questioned in light of the methods discussed with and among clients. Anti-money laundering and Know Your Customer (KYC) initiatives are crucial for global companies like Binance in ensuring that customers aren't involved in criminal behavior like terrorism or fraud.

Financial regulation experts expressed alarm over how readily Binance's KYC and AML processes may be bypassed.

Sultan Meghji, a professor at Duke University and a former chief innovation officer of the FDIC, said to CNBC, "If I had an eight out of 10 concern about Binance from a regulatory standpoint and a national security perspective, this takes it to a 10 out of 10."

Meghji's worries about Binance's inadequate implementation of its KYC policies go beyond China. He stated, alluding to some of the methods disclosed, "I think specifically about the national security implications of how terrorists, criminals, money launderers, cyber folks in North Korea, Russian billionaires, et cetera, could use this to obtain access to this infrastructure."

Jim Richards, an anti-money laundering official at Wells Fargo, concurred that methods for getting over Binance's KYC restrictions might have effects outside of China. "What about your Iranian, Russian, or North Korean customers?" Richard inquired.