A Financial Times report published this Thursday (13) claimed that cryptocurrency exchange Binance provided a “grossly inaccurate” annual report to one of the UK entities. The accusation would have come from a co-owner of Dimplx, a British company formed as part of a joint venture with Binance. According to Dimplx directors, the exchange has filed 2020 financial statements for one of its companies that “do not accurately report” the nature of its business. In addition, the report, according to the indictment, does not clearly present the company’s revenues, assets and liabilities, “including potential tax liabilities”.
Binance Troubled in the UK
As the FT reported, Dimplx made the claim in its own filings this month to Companies House, the government’s main business registry. The company raised questions about the role that companies in the country played in Binance’s global operations in the period before the Financial Conduct Authority, the FCA, warned against the company. The FCA issued a warning about Binance’s irregular activity in the UK in June 2021. The regulator expressed concerns about Binance, warning that its “complex and high-risk financial products [representam] a significant risk. Furthermore, the FCA said that Binance did not provide background information about its global operations. This includes, for example, “business names and roles for all entities in the group globally”. The exchange, for its part, said it intends to re-establish relations with the FCA. It will then once again apply for UK oversight of its operations. Binance and Dimplx created a joint venture in the UK in 2019. But the relationship between the companies is not going well. Dimplx even stated that it would sue Binance, but declined to give details of this. Meanwhile, Binance stated that in the face of threats of shareholder litigation, it could not respond to all allegations. “However, we understand that minority shareholders are disappointed that the joint venture has not come to fruition,” he said.
Binance Digital
Dimplx’s accusations cite a second Binance UK entity, Binance Digital, which was incorporated in the country in November 2019. Dimplx owns 20% of the company and Binance founder Changpeng Zhao, CZ, has a stake. majority. Dimplx director Simon Dingle, who served on Binance Digital’s board until December 2020, alleged several inaccuracies in Binance Digital’s 2020 accounts. The exchange’s report for that year suggested that Binance Digital held around £100 million. in “cash and/or bank balances” and that the same amount was owed to “creditors”. Diimplx directors believed that this amount represented balances held “on behalf of Binance Digital customers”. However, the financial statements recorded “zero turnover or fees in relation to any transactions carried out with any customer during the year”.
