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Binance officially exited China in 2017 after a massive clampdown on the industry. As a workaround for restrictions, the company launched a peer-to-peer exchange enabling users to trade Bitcoin, Ether, and Tether against renminbi (yuan). Then, in 2021, the exchange informed about shutting down the service following Beijing's blanket ban on crypto transactions. It was also supposed to conduct checks to allow users from mainland China to withdraw funds only.
Binance in China: $90 billion in monthly trading, 900,000 active users
It appears, though, that things took a different turn. The Wall Street Journal has revealed that Binance is doing great in China. The numbers are striking. Two years after the ban, the platform maintains over 900,000 active users, with cryptocurrency-related trading volume standing at $90 billion, which makes China Binance's largest market, accounting for 20% of the company's global volume.
What's more, the company actively collaborates with the Chinese police, helping investigators detect potential criminal activity among the platform's users, the WSJ claims, quoting current and former employees.
Binance's internal memo: "Don't confirm offices in China"
Binance's double game has already been highlighted earlier this year. In March, the Financial Times reviewed the company's internal documents pointing to substantial links to China. According to the report, Changpeng "CZ" Zhao, the company's CEO, along with other senior staff members, repeatedly commanded Binance employees to conceal Binance's ties with China, including an office that was still in use at the end of 2019, and a Chinese bank used for salary transfers.
Read also: Belarus considers P2P crypto ban for cybercrime control.
When the news surfaced in 2019, claiming that Binance was opening an office in Beijing, the company's employees allegedly received messages of the following content: "Reminder: publicly, we have offices in Malta, Singapore, and Uganda. (…) Please do not confirm any offices anywhere else, including China."
Binance denies links to China
"It is unfortunate that anonymous sources are citing ancient history (in crypto terms) and dramatically mischaracterizing events. This is not an accurate picture of Binance's operations," the company commented in a statement for the Financial Times.
Also in March this year, Binance denied conducting any operations or maintaining any technology, such as servers or data, in China. The platform also declared that it had never been registered or incorporated in China.
Is Binance fighting for survival?
Recently, Binance has been under fire from the SEC, which sued the exchange for alleged illegal activities and misuse of customer funds. Preserving its foothold in China is vital for Binance as it navigates a regulatory crackdown that could jeopardize its future.
According to the WSJ report, the exchange has facilitated the circumvention of restrictions for Chinese users by directing them to visit different websites with Chinese domain names before redirecting them to the global platform.
China's central bank doesn't comment on Binance's Chinese operations
China's central bank, responsible for imposing the crypto ban, didn't react to a request for comment from the WJS. "The Binance.com website is blocked in China and is not accessible to China-based users," a company spokesman informed without elaborating further.
Despite the official ban on Binance's website, documents obtained by the WJS suggest a relaxed approach to verifying users' identities, with less than half of China-based registered users undergoing know-your-customer checks after the 2021 clampdown.
