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Last week, Decrypt spoke to Binance CEO Changpeng “CZ” Zhao about the exchange’s approach to regulators. And then Forbes dropped its bombshell story.
Last week, Decrypt interviewed Binance’s CEO Changpeng “CZ” Zhao. And then, just as we were about to publish the story, Forbes dropped a bombshell, alleging that the cryptocurrency exchange concocted an elaborate scheme to evade regulators. Viewed in that light, some of CZ’s comments, in which he spoke about Binance’s decentralized organizational structure, and its strategy for dealing with regulators, took on a whole new complexion.
Forbes’ report alleged that Binance created a US company dubbed the “Tai Chi entity” as part of an "elaborate corporate structure designed to intentionally deceive regulators and surreptitiously profit from crypto investors in the United States.” According to leaked Binance documents quoted in the report, the exchange set up a US entity to “distract regulators with feigned interest in compliance,” while customers were encouraged to evade geographic restrictions around the parent site.
CZ spoke to Decrypt before Forbes published its article, and, in the interim, he denied any knowledge of the document concerned. But what he had to tell us nevertheless sheds light on the operations of the rapidly expanding global crypto exchange, and its approach to dealing with regulators.
During our conversation, CZ made his feelings on regulations plain, calling them “overly restrictive” in their current incarnation.
“Two years ago, nobody knew what they were supposed to do, or not supposed to do. There was just no regulatory clarity,” he said. “Today I think we are in a situation where most of the first iteration regulations are likely going to be overly restrictive because the most natural thing for regulators to do is to borrow the traditional banking regulations and apply them to crypto.”