Binance’s entry into Europe has been marked by regulatory challenges, shady transactions, and a series of lawsuits.

After escaping China to evade impending cryptocurrency regulations, Binance, the largest crypto exchange in the world, began searching for a new home.

Its attempts to establish itself in Malta and London failed due to difficulties in obtaining local crypto licenses.

Binance eventually found a new base in Lithuania, a small country that not only provided access to the European Union but also allowed the exchange to set up a subsidiary and handle billions of dollars in transactions.

Bifinity, Binance’s subsidiary in Lithuania, was a win-win for both the exchange and the small European country, according to a new report from Forbes.

On one hand, it contributed significantly to Lithuania’s economy, becoming the country’s second-largest corporate taxpayer and generating $44 million in tax contributions.

On the other hand, Binance managed to process nearly $7 billion in crypto transactions, which made the platform the largest crypto exchange in the industry.

However, Bifinity was also involved in facilitating questionable transactions, the report said.

It transferred $6.3 billion to another subsidiary called Merit Peak, which was accused by the Securities and Exchange Commission (SEC) of mixing customer deposits with company funds.

Some of the funds were used to purchase a $55 million private jet, and CEO Changpeng Zhao received $62.5 million in his personal bank account.

Binance’s Selection of Lithuania Raises Questions

Binance’s selection of Lithuania has raised eyebrows among industry experts.

Anil Kashyap, a professor at the University of Chicago and an advisor to the European Central Bank, said why Binance couldn’t establish itself in locations with stronger regulations.

“They set it up in a place with weaker standards, and surprise, surprise, there’s gambling in Casablanca,” he told Forbes.

Furthermore, Bifinity played a crucial role in Binance’s attempts to obtain regulation in the United Kingdom, a goal that would have given the exchange legitimacy in a major financial hub.

Binance’s plan involved acquiring a Nasdaq-listed company with a British crypto license.

However, the effort ultimately failed, leading to a class-action lawsuit against Binance and its executives, including Zhao, accusing them of making false statements that artificially boosted the company’s stock price, the report said.

In a statement, Binance’s PR director for Europe, Simon Matthews, denied any wrongdoing.

He claimed that auditors had issued positive opinions regarding the company’s financial statements and that Bifinity operated in an open and transparent manner, maintaining relationships with regulated payment providers and banks.

However, several payment providers, including Paysafe, have distanced themselves from Binance due to regulatory concerns, both in Europe and globally.

Binance’s Problems Further Pushes the Exchange toward Lithua

Binance’s problems have increased its reliance on its Lithuanian operation.

Initially met with skepticism by Lithuanian authorities, Binance found a way around the country’s regulations by registering Bifinity as a virtual currency exchange, a process that doesn’t require a license from the central bank as long as the firm doesn’t hold customer funds.

The Bank of Lithuania told Forbes that Bifinity is not supervised or licensed by the bank.

“While the Lithuanian entity primarily processed customer credit card transactions, it also became integral to Binance’s effort to gain a foothold in the U.K.,” Forbes said.

However, Binance’s previous efforts to obtain a crypto license in the UK under the leadership of Helen Hai, a British citizen married to an early Binance investor, also faced fraud allegations.

The partnerships and acquisitions she spearheaded ultimately ended in failure and sparked legal disputes.

Binance’s plans to establish a London base remain uncertain, as the company recently deregistered its last-remaining UK subsidiary.

However, Binance maintains its intention to register in the UK despite facing multiple challenges.

It is worth noting that Binance’s troubles extend beyond Europe.

Last month, the SEC sued Binance and its CEO for their “blatant disregard of the federal securities laws,” unveiling 13 charges against the platform, including operating an unregistered exchange.

The agency accused Binance of breaking the law by offering unregistered securities to the general public, including its BNB token and BUSD stablecoin.

Likewise, French authorities conducted a visit to Binance’s office in France last month. They are investigating allegations of illegal provision of digital-asset services and aggravated money laundering.

The exchange was also ordered to cease operations in Nigeria by the country’s Securities and Exchange Commission (SEC).

More recently, Australia’s financial regulator visited Binance offices as part of an ongoing probe into the company’s defunct local derivatives business.

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