Since the FTX scandal, the world's largest cryptocurrency exchange, Binance, has made a major effort to become the industry leader in transparency. However, a new report claims that Binance insiders are suspected of helping users bypass security protocols.
According to a CNBC investigation, Binance employees and volunteers have allegedly been helping customers in China undermine the exchange’s know-your-customer controls (KYC).
The report points to Binance’s official Chinese chat room, which has more than 220,000 registered users. There, users were reportedly able to access shared messages through a technique that bypassed the exchange’s KYC, residency, and verification protocols. The messages allegedly came from accounts identified as Binance employees or trained volunteers, dubbed “angels.”
The techniques shared included forging bank notes, proving false addresses and other simple system manipulations. A Binance spokesperson reportedly said: "We have taken action against employees who may have violated our internal policies, including wrongly soliciting or making recommendations that are not permitted or do not meet our standards."
Binance co-founder Changpeng Zhao, who is usually active on social media, had no comment at the time of writing. Zhao had previously tweeted denouncing the rumors that were spreading on the Chinese WeChat platform. A Binance spokesperson responded to Cointelegraph saying that the company is conducting an internal investigation into the KYC rumors. The development comes as China continues to impose a strict ban on cryptocurrencies, which began in 2021 and outlawed cryptocurrency trading in 2017. If caught, Chinese users who evaded KYC rules to access Binance could face consequences.
Some have called on the Chinese government to reconsider the cryptocurrency ban, although regulators have not backed down. Meanwhile, Chinese officials continue to accelerate plans to develop a central bank digital currency, the digital yuan. More recently, millions of dollars have been spent on adoption efforts.
