Global cryptocurrency exchange Binance has requested prime brokers, such as FalconX and Hidden Road, to ramp up their screening processes of clients to prevent having U.S. investors on the exchange, Bloomberg reported on Tuesday, citing people familiar with the matter.
As prime brokers mainly service institutional investors, the range of information demanded from clients includes the geographic locations of their offices, founders and employees, according to the report. They also require clients to have the information attested to confirm its accuracy.
The crypto exchange has been asking prime brokers to require additional information for their clients since around the time Binance pleaded guilty to U.S. charges in November, the report said.
Binance did not immediately respond to The Block’s request for comment.
Binance after guilty plea
Binance and its former CEO Changpeng Zhao admitted to violating the Bank Secrecy Act last year. The U.S. Department of Justice had announced a settlement with Binance on alleged money laundering, fraud and sanctions violations, resulting in the exchange paying a $4.3 billion fine.
“Changpeng Zhao made Binance, the company he founded and ran as CEO, into the largest cryptocurrency exchange in the world by targeting U.S. customers, but refused to comply with U.S. law,” Acting Assistant Attorney General Nicole M. Argentieri of the DOJ’s criminal division said in an announcement last November.
Binance’s U.S. arm, which was hit with a lawsuit from the Securities and Exchange Commission in June last year along with Binance and Zhao, claimed that it had to cut over two-thirds of its staff after a 75% decline in revenue following the enforcement action.
However, the global exchange appears to have grown stronger since Zhao’s guilty plea and subsequent step-down, as its total value locked has increased from $67 billion to $112.5 billion since November, according to data from DefiLlama. This may be attributed to the record-breaking surge in bitcoin value over the past few months.
Binance still stands as the largest cryptocurrency exchange in the world in terms of trading volume, according to CoinMarketCap data.
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