High-Net-Worth Influence: Binance’s VIP Clients Revealed in DOJ Settlement

High-Net-Worth Influence: Binance’s VIP Clients Revealed in DOJ Settlement

In an article titled “High-Net-Worth Influence: Binance’s VIP Clients Revealed in DOJ Settlement,” the recent $4.316 billion settlement between Binance and the U.S. Department of Justice (DOJ) is brought to light. The DOJ’s charges unveiled how Binance continued to provide market access to VIP American patrons, despite their claims of banning U.S. users. This revelation sheds light on the influence of high-net-worth individuals and the significant role they played in Binance’s trading revenue. The article delves into the court filing and uncovers the scope of Binance’s VIP clientele, giving a glimpse into the power and impact of crypto whales in the industry.

▶ [Kucoin] Transaction fee 0% discount CODE◀

The Whales of Binance Decoded in DOJ Court Filing

The recent charges against Binance by the U.S. Department of Justice (DOJ) have sent shockwaves through the cryptocurrency community. The DOJ reached a landmark $4.316 billion settlement with Binance for its noncompliance with anti-money laundering (AML) laws. One of the key revelations from the court filing is the significant role played by Binance’s VIP customers, known as the “whales.”

Binance’s American VIPs

The court documents highlight Binance’s practice of catering to high-net-worth individuals, particularly those from the United States. Despite Binance’s claim to have blocked U.S. users and established a separate exchange for the U.S. market, the company continued to retain a substantial number of U.S.-based VIPs on Binance.com. These VIPs, including trading firms that made markets on the platform, contributed significantly to Binance’s revenue.

Binance’s VIP Clientele

According to the court filing, Binance had a formidable roster of 3,500 American VIP users in June 2019. These VIPs accounted for a staggering 70% of Binance’s trading volume, with U.S. VIPs making up about one-third of this high-value segment. The court documents also reveal that CZ, the ex-CEO of Binance, was briefed about the 11,000 whale clients who represented a significant portion of the exchange’s revenue.

Binance’s Revenue from High-Net-Worth Individuals

The court documents shed light on the extent to which Binance relied on its VIP clients for revenue generation. The 11,000 VIP whales accounted for 70% of Binance’s trading volume in 2019. This highlights the power and influence of these high-net-worth individuals in the cryptocurrency market.

Binance’s Retention of U.S.-based VIP Users

Despite the establishment of Binance US and the claim to no longer serve U.S. customers, Binance continued to retain a substantial number of U.S.-based VIPs. The court filing reveals that Binance actively pursued strategies to clandestinely retain these VIP users, even resorting to direct phone communication. The filing also mentions an internal “VIP handling” guidebook that instructed employees on how to manage these elite spenders.

Communication with U.S.-based VIP Users

The court documents highlight the efforts made by Binance to maintain communication with its U.S.-based VIP users. Direct phone communication was one of the strategies employed to retain these high-value customers. This reveals the lengths to which Binance went to ensure the loyalty of its U.S. VIP clientele.

VIP Handling

Binance categorized its American patrons as “miscategorized,” suggesting that they did not fit neatly within the company’s classification system. An internal guidebook on “VIP handling” provided instructions to employees on how to manage these VIP users. The guidebook emphasized the importance of maintaining user confidentiality and even demanded that privileged users open accounts without any U.S. documentation.

Compliance with KYC Regulations

The court filing raises concerns about Binance’s compliance with know-your-customer (KYC) regulations. While Binance publicly stated that all users complied with KYC regulations, the filing reveals that a higher tier of customers who did not submit KYC documentation were grandfathered until May 2022. This suggests that Binance may not have systematically monitored transactions on its platform during this period.

Lack of Systematic Transaction Monitoring

The court filing alleges that Binance did not systematically monitor transactions on its platform, particularly during the period in which non-KYC compliant customers were grandfathered. This lack of systematic transaction monitoring raises questions about Binance’s commitment to AML laws and regulations.

▶ [Kucoin] Transaction fee 0% discount CODE◀

Power and Impact of Crypto Whales

The court documents provide a glimpse into the power and impact of crypto whales in the cryptocurrency industry. The 11,000 VIP whales accounted for a significant portion of Binance’s revenue and trading volume. This highlights the influence that high-net-worth individuals can have on the market and the need for greater scrutiny and regulation.

Conclusion

The DOJ court filing against Binance has shed light on the role played by VIP customers, known as the whales, in the exchange’s operations. The significant revenue contribution from these high-net-worth individuals, particularly those from the United States, underscores their power and influence in the cryptocurrency market. The court filing also raises concerns about Binance’s compliance with KYC regulations and systematic transaction monitoring. It remains to be seen how these revelations will impact the future of Binance and the broader cryptocurrency industry.

▶ [Kucoin] Transaction fee 0% discount CODE◀