2-8-2023 (BEIJING) Binance, the world’s largest cryptocurrency exchange, has defied China’s cryptocurrency trading ban and witnessed a staggering $90 billion in cryptocurrency-related trades in a single month, according to internal figures seen by The Wall Street Journal and confirmed by current and former employees. This makes China Binance’s most substantial market, accounting for 20% of global trading volume, except for transactions by a subset of major traders.
Internally, Binance openly acknowledges China’s significance, and even its investigations team collaborates with Chinese law enforcement to detect potential criminal activity among the country’s 900,000 active users. However, this has raised concerns as the exchange faces mounting regulatory pressure and legal challenges.
Binance, currently facing regulatory issues globally, came under the spotlight when the U.S. Securities and Exchange Commission sued the exchange and its founder, Changpeng Zhao, over alleged illegal operations and misuse of customer funds. The U.S. Justice Department is also conducting an ongoing investigation into the company. These issues have caused Binance’s market share among U.S. users to plummet, leading to significant downsizing with over 1,000 job cuts.
The exposure of Binance’s operations in China sheds light on how the crypto giant continues to operate discreetly in places where it is officially unwelcome. The exchange has been reportedly aiding Chinese users in circumventing restrictions by directing them to visit different websites with Chinese domain names before redirecting them to the global exchange.
Despite the Chinese government’s crypto ban, the country’s cryptocurrency market remains robust. Chinese users use VPNs to sign up on banned exchanges, and platforms like Huobi have prompted users to apply for Dominican digital citizenship to continue trading.
Binance’s presence in China diminished after the ban in 2021, but it resurged in 2022, maintaining high trading levels. The exchange’s second-largest market is South Korea, followed by Turkey, with all other countries comprising less than 5% of its volume.
Internal data shows that about 100,000 Chinese users on Binance are classified as “politically exposed persons,” requiring greater scrutiny due to their potential involvement in corruption, bribery, or money laundering. The exchange had previously been lax in verifying the identity of its Chinese users.
