Binance and the Problem of Unregulated Crypto Exchanges

Binance is the largest crypto exchange in the world by number of transactions. It is also banned in several countries and is currently under investigation by Pakistani authorities for $100 million user funds being transferred into third-party wallets. How can a crypto platform that is riddled with scandal still have so many users? 

It isn’t as if regulators and governments haven’t tried to warn the public about Binance. Reading the history of Binance, it is clear that any customers who did their due diligence and had researched this crypto exchange properly would have avoided its services before recent problems arose. 

If you have lost money to a crypto scheme, you are not alone. Thousands of consumers each year are victims of online fraud. It is important to find experts who can help you track down your funds on the blockchain and to find those responsible for taking your money. 

Chargebax has the expertise and the right strategies to make your chargeback, wire recall or crypto recovery case successful. We consult with clients and develop strategies to bolster your claim and help you recover your funds. Talk to our professionals today. 

A Close Look at Binance

Reading Binance’s history is a discovery in how a crypto platform can be so influential and yet fall afoul of regulators. Unfortunately, not looking closely at a financial service before entrusting your money to them has a huge price–the loss of funds to fraud. 

Binance was created in China by Chanbpeng Zhao in 2017. Zhao had created high volume trading machines that are used by day traders. He also was involved in other blockchain and cryptocurrency ventures. 

When China cracked down on cryptocurrency, Binance said it would move its location to Malta. By 2018, Binance was considered the largest cryptocurrency exchange according to the number of daily transactions and had a market cap of $1.3 billion. 

Binance was involved in a series of partnerships and investments, including stablecoin. It experienced a major security breach in 2019 and it temporarily halted deposits and withdrawals but resumed operations. 

A hacking can happen, but what followed were a series of sobering warnings about Binance. First, Malta’s government issued a statement that, contrary to its public statements, that Binance was not located in Malta and was not authorized by Maltese financial institutions to offer any services. 

In 2020, a Forbes article alleged it obtained leaked documents showing that Binance intended to deceive US regulators by blocking access to specific IP addresses. In 2021, news broke that Binance was under investigation by the IRS and the DOJ for money laundering and tax offenses. In the same year, the Financial Conduct Authority released a statement that Binance should desist from offering services to any UK customers. 

Binance, which is now located in the Cayman Island, has received similar warnings from Thai financial authorities, is currently banned in the US, the UK and is now facing allegations of direct involvement in a crypto wallet scam by Pakistani authorities. How could a major cryptocurrency exchange go so wrong? 

The Problem With Unregulated Crypto Exchanges

Many people have not yet gotten the memo about Binance, which is unfortunate, but sooner or later, it may wane in popularity. There are several cautionary tales that can be derived from the Binance story.

First, many people don’t seem to worry about news that platforms or brokers are getting around regulations and government rules. They may see the government as fat cats who don’t have the public’s true interests at heart. They might not mind, if they see these headlines, news of their favorite crypto exchange having tax problems or getting around regulators. 

In fact, one reason many people love cryptocurrency is that they feel they are free from government oversight, since the blockchain has yet to be regulated. However, when platforms and brokers try to get around rules, sooner or later it will be the consumer who will pay. 

The fuel of stories like this is greed. When a platform or a broker doesn’t even try to get a real license from the very beginning, that is a sign that it believes its popularity and flashy site or platform will sufficiently dazzle customers that they won’t worry about regulation. 

First Binance left China because of tight rules, which was somewhat understandable, but why didn’t they try to get a legitimate license and find a location they could be honest about? Instead, they falsified their location in Malta and got into other types of trouble with regulators. The problems seemed to grow, from false licensing information, to tax issues, money laundering and eventually accusations of involvement in a bitcoin wallet scam. 

The bottom line is that any crypto exchange or broker that does not hold a license is not to be trusted. If they are honest, what do they have to hide from a regulator? Also, a license should inspire consumer confidence. 

How to Choose a Reliable Crypto Exchange

Taking the lessons from Binance to hear, here are some tips for choosing a reliable crypto exchange: 

  • Check that it has a license
  • Verify the license
  • Do research on the history of the company and who is behind it
  • Do a search on Google News about the exchange
  • Ensure it uses encryption and is secure
  • Read all terms and conditions carefully before opening an account. 

Even if you have taken all of these steps, it is still possible that something will go wrong on the crypto exchange. That is when you need professionals who can consult with you and help you track down bitcoin transactions on the blockchain and try to recover funds. 

Talk to ChargeBax About Tracking Down Your Funds

If you have lost money to a crypto fraud, you can retrieve your funds with the help of fund recovery assistance. Chargebax experts deal with numerous fund recovery cases and have helped our clients retrieve funds from crypto scams, forex scams, and disputes. We create intelligence reports, negotiate with banks and provide a plan of action that will help you get your funds back.

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