Binance Faces Major Contraction Due to Heavy Regulations
Binance, one of the largest cryptocurrency exchanges in the world, is currently undergoing a significant reorganization. With governments around the world implementing strict regulations on the financial sector, crypto exchanges are now required to comply as well. Despite operating in Russia even after the imposition of sanctions due to the war in Ukraine, Binance has now decided to exit the Russian market.
The Beginnings of Binance’s Contraction
The contraction of Binance began with its departure from Canada in May. Shortly after, it also withdrew from Cyprus, Nigeria, and the United Kingdom. In the Netherlands, Binance decided to leave because it deemed it unnecessary to obtain the required licenses, citing the relatively small size of the Dutch market.
It seems that Binance has had to grapple with one bad news after another recently. The Securities and Exchange Commission (SEC) filed a lawsuit against the exchange, accusing it of engaging in fraudulent activities and selling unregistered securities, among other things.
Binance’s American subsidiary, Binance.US, has also been accused of having close ties to Binance. Many top executives have departed from both companies, and significant cuts have been made to the workforce.
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Binance’s Departure from Russia
In a press release, Binance announced its departure from Russia and the sale of its Russian branch to CommEx, a trading platform that was officially established just this week. To ensure a smooth transition process, the move is expected to take up to a year, although a portion of verified Russian customers will be redirected immediately.
Binance’s Chief Compliance Officer stated that it is not in line with the exchange’s compliance strategy to continue operating in Russia. Since the imposition of sanctions against Russia, it has been illegal for western companies to offer services to Russian citizens.
While Binance initially complied with this restriction following the introduction of sanctions, it began accepting Russian customers again earlier this year. This move did not sit well with the US government, as the sanctions are still in effect. Now, Binance has decided that it does not want to take any further risks.