In a significant move underscoring its dedication to fostering transparency and protecting consumer rights within the fintech ecosystem, the cyber rating agency PayRate42 has announced its support for FinTelegram’s #BinanceWatchdoginitiative. This initiative aims to cast a critical eye on the operations of Binance, the embattled crypto exchange, amidst growing concerns over its business practices. PayRate42 downgraded Binance to Red Compliance.

Legal Obstacles and Global Challenges

The findings of the US authorities, including the CFTC and FinCEN, about the involvement of Binance as a systematic payment facilitator of illegal and terrorist activities lead to the inevitable conclusion that Binance itself is a cybercrime organization. It is, therefore, not surprising that Binance will have to withdraw from the U.S. within five years.

The legal framework within which Binance operates further complicates the pursuit of justice for wronged clients. By strategically basing entities such as Nest Services Limited in offshore jurisdictions like Seychelles, Binance places a daunting barrier in front of aggrieved customers, often making legal action prohibitively expensive or logistically impractical. This situation not only evades direct legal accountability but also poses significant challenges to the regulatory oversight of cryptocurrency exchanges.

The lack of decisive action from regulatory authorities against Binance’s practices serves to embolden the platform, potentially allowing it to withhold client funds with impunity. This not only questions the efficacy of financial regulation but also shines a spotlight on the ethical responsibilities of digital asset exchanges.

Unraveling the Systemic Issue of Account Freezes

The systematic freezing of accounts by Binance, as reported by numerous clients, suggests a deep-rooted issue that goes beyond isolated incidents. Such practices not only undermine the financial freedom of users but also bring up severe legal implications related to the unauthorized retention of funds. The underlying speculation is that Binance’s actions may be predicated on the assumption that many clients might refrain from official complaints due to undeclared crypto assets or a reluctance to engage with law enforcement.

Downgrading to Red Compliance

Based on the findings of FinTelegram, the PayRate42 team has downgraded Binance from the previous Orange Compliance Rating to Red Compliance. PayRate also points out that Binance is active as a payment facilitator in the illegal online casino and gambling sector via Binance Pay.