Home Altcoins News Binance Takes Stricter Measures to Block U.S. Investors: Enhances KYC for Prime Brokers

Binance Takes Stricter Measures to Block U.S. Investors: Enhances KYC for Prime Brokers


According to insider sources cited by Bloomberg, Binance is urging prime brokers like FalconX and Hidden Road to bolster their Know Your Customer (KYC) procedures. These efforts are aimed at thwarting U.S. investors’ access to the platform, a contentious issue given the regulatory landscape.

For those unfamiliar, prime brokers act as intermediaries between institutional investors and the market, offering various services including custody, trade execution, and risk management. Binance’s directive requires these brokers to gather comprehensive KYC information from clients, verifying details such as office locations and founders’ identities.

A spokesperson for Binance reiterated the exchange’s commitment to compliance and transparency, emphasizing the importance of clarity for enterprises seeking access to its liquidity offerings.

This move comes amidst recent revelations regarding Binance’s significant growth driven by U.S. customers, despite regulatory restrictions. Court documents unveiled tactics allegedly employed by former CEO Changpeng Zhao and others to obscure clients’ U.S. connections, including the use of VPNs.

Binance’s journey towards stricter compliance measures gained momentum following a settlement with U.S. authorities last November. The exchange, along with Zhao, admitted to violations including money laundering and fraud, agreeing to a hefty $4.3 billion settlement.

In the aftermath of the settlement, Zhao stepped down as CEO, with Richard Teng taking the helm to navigate the exchange through turbulent waters, particularly in the U.S. market. This transition saw Binance’s U.S. arm downsizing significantly, reflecting the impact of regulatory scrutiny.

Furthermore, Binance Holdings Ltd. has tightened its listing requirements for new digital tokens to enhance investor protection. These measures include extended lock-up periods and increased reserves for market makers.

In response to inquiries regarding stricter checks by prime brokers, Binance reiterated its commitment to compliance and emphasized the transparency of its assessment criteria for end users.

The Justice Department’s scrutiny of Binance’s operations culminated in a hefty $4.3 billion settlement last November, wherein the exchange admitted to violating the Bank Secrecy Act. Former CEO Changpeng Zhao, synonymous with Binance’s meteoric rise, relinquished his role as part of the settlement, with Richard Teng assuming the mantle to steer the exchange through choppy regulatory waters.

Post-settlement, Binance embarked on a mission to shore up its compliance arsenal, implementing stricter due diligence measures and fortifying investor protections. Notably, the exchange imposed lengthier “cliff periods” for new token listings, alongside increased reserves for market makers and heightened security deposits.

The ramifications of Binance’s compliance crusade reverberated through its U.S. arm, which witnessed significant downsizing in the aftermath of regulatory scrutiny. Over two-thirds of its staff were reportedly let go, signaling the toll exacted by regulatory turbulence on operational viability.

As the crypto market continues to evolve, regulatory compliance remains a focal point for exchanges like Binance. With these latest measures, Binance aims to reinforce its commitment to operating within regulatory frameworks while providing a secure and transparent trading environment for users worldwide.

In conclusion, Binance’s proactive approach towards compliance underscores the exchange’s dedication to fostering trust and stability within the cryptocurrency ecosystem. As the regulatory landscape evolves, exchanges must adapt and innovate to maintain integrity and ensure the long-term viability of the digital asset market.

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Mike T, an accomplished crypto journalist, has been captivating audiences with her in-depth analysis and insightful reporting on the ever-evolving blockchain and cryptocurrency landscape. With a keen eye for market trends and a talent for breaking down complex concepts, Mike's work has become essential reading for both crypto enthusiasts and newcomers alike. Appreciate the work? Send a tip to: 0x4C6D67705aF449f0C0102D4C7C693ad4A64926e9

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