“FUD” was Binance CEO Changpeng Zhao’s response to a Forbes’ article that reports that the largest spot cryptocurrency exchange “conceived of an elaborate corporate structure designed to intentionally deceive regulators and surreptitiously profit from crypto investors in the United States,” citing a document “thought to be created by its senior executives.”
Harry Zhou, a confirmed Binance employee, has been identified to be the creator of the document.
However, Zhao said on Twitter that a Binance employee did not create the document in question and that “anyone can produce a ‘strategy document.'”
The leaked document further mentions Binance.US to engage with the Securities and Exchange Commission (SEC), the Commodities Futures Trading Commission (CFTC), and the New York Department of Financial Services (NYDFS) but “with no expectation of success.”
CZ maintained that the exchange has “always operated within the boundaries of the law” and that it has approached every location with “proper licensing and applications.”
“Prioritized Regulatory Compliance”
Catherine Coley, the CEO of Binance.US, also released a video to set the record straight while discussing the “inaccuracies” in the Forbes article. She said,
“We have a robust AML Program and Digital Asset Framework to approve new projects on our platform. In the last 13 months, we have built strong relationships with regulators, invested in compliance infrastructure, and we only operate in jurisdictions where we have licenses.”
She further shared that Binance.US is not a subsidiary of Binance Holdings but an independent company which has “prioritized regulatory compliance.”
The document further explicitly calls for the “strategic” use of VPN at Binance to “minimize economic impact.”
The use of virtual private networks is not only publicly advocated by CZ but also clearly stated on the company website.
However, since then, the exchange team has quietly changed the original wordings from “you might want to use a VPN to unblock sites that are restricted in your country” to the current “some people also use a VPN to unblock sites that are restricted in certain locations.”
No More “FUD”
Founded in China in the summer of 2017, the exchange is reportedly currently based in the Cayman Islands. However, there has been much debate about the exchange's physical office, which started when reports came from China raiding the company’s office in Shanghai.
Following that, CZ countered that they don't’ have a fixed office just like Bitcoin doesn’t have one, which is “the beauty of the blockchain.”
Earlier this year, the Malta Financial Services Authority (MFSA) released a public statement saying that Binance is not authorized to operate in the country. At that time, CZ called it a “FUD,” saying they aren’t “headquartered or operated in Malta.”
Can we please leave the term "FUD" in 2017 where it belongs?
— Jake Chervinsky (@jchervinsky) October 29, 2020
Amidst this, Jake Chervinksy, General Counsel at Compound Finance, said the term FUD which means “Fear, uncertainty, and doubt,” shouldn’t be used by the industry anymore because “it's mostly used to belittle, dismiss, & distract from valid criticism so that tribes of bagholders feel comfortable ignoring reality.”
This “meaningless reflex” was used by bagholders and salesmen during the bull market for 2017 to “keep reality at bay while rampant fraud & irrationality inflated the ICO bubble,” he added.