In the last week, alleged information emerged that cryptocurrency exchange Binance had lost billions of dollars in revenue due to an action by its founder and CEO Changpeng Zhao, CZ. According to rumors, the exchange that trades the largest volume of cryptocurrencies in the world would have had significant losses due to the implementation of the KYC protocol, the acronym for “Know Your Customer”. It is a tool used by companies in the financial market, for example, to verify the identity of their customers, their suitability and the risks involved in maintaining the business relationship. That is, KYC is used to prevent illicit activities and transactions such as money laundering.
Binance Lost Billions Because of KYC?
The information that Binance would have suffered heavy losses on account of KYC was provided by Tyran Gambaryan. He is a former investigator for the US Internal Revenue Service’s cybercrime unit. He told CoinDesk that CZ’s decisions ahead of the exchange resulted in huge losses of money. But despite this, Gambaryan claimed that CZ’s decisions regarding the application of KYC made Binance outperform many other crypto platforms when it comes to security. Binance started requiring KYC from its users after receiving a series of warnings from regulators about its lack of authorization to operate in the respective countries last year. Nations such as the United Kingdom, Japan, Canada, Singapore, Italy itself and several others have issued warnings in this regard. Since then, Binance has sought to strengthen its regulatory and compliance teams. At the same time, it tries to meet local requirements. After that, Binance got licenses and operation in Italy, France, Spain, Canada, Bahrain, Abu Dhabi and Dubai
CZ Denies Binance Lost Billions
Amid rumors of significant losses by KYC, CZ went public to rebut the allegations. On his Twitter account, the billionaire denied that Binance had the aforementioned losses. Sharing the news that the exchange lost 90% of customers and billions in revenue after implementing KYC, CZ tweeted:
It’s a complete mis-quote. Look at the numbers…
😂😂😂 But the fact is, this type of headlines sell more clicks… Sad, but true. https://t.co/Zuega2hMjU — CZ 🔶 Binance (@cz_binance) August 1, 2022
“It’s a completely misquoted quote. Look at the numbers… But the fact is that this type of headline sells more clicks… Sad but true.” Then in another tweet, CZ said that Binance spent the equivalent of BRL 5.3 billion on compliance: “Just checked. Binance has spent over $1 billion on compliance efforts, with a high pass rate. And everything is fine. Binance’s market share has increased, not decreased. Blockchain and third-party data show this.” The Binance CEO also shared a tweet @FatManTerra, very active with regard to investigations in the crypto world. FatMan said Reuters reporters reached out to him asking to contact his “anti-Binance sources”. For him, there are hidden interests in tarnishing Binance’s reputation: “I am convinced that a major crypto player is executing a targeted attack against Binance. They’re digging through the ground – hard. Someone is waging an information war. So we must be vigilant.” Read also: China makes first loan in history with CBDC Read also: Japan abandons plans to launch CBDC due to lack of citizen interest Read also: CEOs of Binance, KuCoin and OKX encourage sending assets to their exchanges after hacker attack on Solana wallets
