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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

Binance to Sell Off Russian Operations

Crypto exchange Binance, which has been facing a series of legal challenges in recent months, has made a surprising move by selling all assets of its Russian branch to a company that was established only days before the transaction. Binance’s troubles began in June when the U.S. Securities and Exchange Commission (SEC) initiated a lawsuit against the exchange, alleging violations of securities laws. The SEC accused Binance of engaging in unregistered sales and offers of securities and misleading potential investors about controls and surveillance over manipulative trading.

The lawsuit triggered a major investigation into the company’s activities, and in September, the SEC criticized Binance for its lack of cooperation with federal regulators, leading to further scrutiny.

Despite Binance’s claims that the lawsuit is part of a broader federal crackdown on cryptocurrencies, the company has faced increasing challenges. Binance U.S. CEO Brian Shroder resigned in September, and significant layoffs followed, affecting nearly one-third of the company’s employees. This upheaval, combined with the requirement for American customers to use Binance.us to comply with regulators and the discontinuation of USD support on the platform, has jeopardized Binance’s presence in the U.S. market.

The most significant shock came on Sept. 27, 2023, when Binance announced the sale of all business and exchange operations in Russia to a newly established company called CommEX. The move raised concerns, with some speculating that the two companies are connected.

Binance cited a DOJ investigation into sanctions violations as the reason for the sale but denied ownership of CommEX. Despite this, many former Binance employees transitioned to CommEX, and the exchange has assured Russian users that their assets are safe.

Binance’s withdrawal from the Russian market, a significant player in the global crypto scene, suggests significant disruptions to its operations and potential legal concerns. If the DOJ continues its probe into CommEX’s legitimacy, Binance may face additional legal challenges.

Following the sale announcement, Binance received some support from industry players, including Circle Internet Financial Ltd. and Paradigm Operations, which filed amicus briefs in support of Binance’s lawsuit dismissal. However, it remains uncertain if this support will deter the SEC’s actions.

In further setbacks, a class-action civil suit was filed Oct. 3, 2023, against Binance and its subsidiaries, specifically naming CEO Changpeng Zhao. The lawsuit aims to secure compensation for damages to businesses affected by Binance’s actions.

Despite these legal battles, the most concerning development for Binance is the decline of its stablecoin, BUSD. Binance announced the cessation of all lending and borrowing in BUSD, a stablecoin that had a peak market capitalization of $23 billion in 2022 but has since plummeted to just over $2 billion.

The future of Binance remains uncertain, with questions about its continued existence or resurgence. However, bitcoin itself appears to remain resilient despite the turmoil surrounding Binance, underscoring the global nature of the crypto industry and its independence from any single exchange. Other actors like HIVE Blockchain Technologies Ltd. (NASDAQ: HIVE) (TSX.V: HIVE) are also weathering the headwinds battering the crypto industry.

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