Komal Joshi · Dec 1, 2020 . 6min read
Binance’s alleged ploy to hoodwink US regulators using “Tai Chi” EXPOSED!
Tai Chi cites a masterplan for Binance to set up a then unnamed entity in the United States with a goal of profiting "illegally" from US investors
By Victor Ugochukwu · Oct 30, 2020 . 8min read
Binance, the largest cryptocurrency exchange is embroiled in a new media frenzy alleging that it laid down strategic ploys to beat US regulators in its expansion into the American market as the “Tai Chi” document reveals.
Forbes made critical details of the leaked Tai Chi document available in a recent publication alleging that the topmost echelon of Binance is privy to it not exempting Changpeng Zhao or “CZ”, founder and CEO of Binance exchange.
The masterplan is for Binance to set up a then-unnamed entity in the United States, throw regulators off the scent of its primary goal which is profiting somewhat “illegally” from US investors. It will do this by registering or at least making attempts to submit to US regulators compliance guidelines.
From all indications according to the alleged document which was created and presented to Binance top management in 2018, the plans are already in play. Forbes alleges one of the Binance former employees Harry Zhou authored the strategy document. Although Binance is claiming no such document exists, however, they can’t deny that Harry Zhou was a former employee. At least Binance’s Chief Compliance Officer confirmed to Forbes via mail that Zhou was a former employee.
Binance first move towards Tai Chi execution was establishing Binance.US.
As revealed by Forbes, the alleged Tai Chi document has four main components: Goals, Proposed Corporate Structure, Regulator Engagement Plans and Long Term License Plans. Talking goals, Tai Chi explicitly stated that the Binance entity would do all to “anti-money laundering and U.S. sanctions enforcement” as it carries out illicit activities. With a major emphasis on regulatory agencies like U.S. Treasury Department controlled FinCEN, OFAC, SEC, CFTC and NYFDS, Binance will ensure its entity registers with the Department of Homeland Service Cornerstone Program. Consequently, Binance looks like its already fairing well in this goal. The exchange already got a license from NYFDS for floating its BUSD stablecoin which is available to U.S. citizens. As well, it recently struck a partnership with CipherTrace, a cryptocurrency intelligence firm backed by DHS.
Retroactively, its next move would be “insulate Binance from U.S. enforcement”. And to do this, the document proposed that “Key Binance Personnel continue to operate from non-U.S. location to avoid enforcement risks.”. And as the Tai Chi image shows, Binance holdings based in the Cayman Islands will be connected to two entities. The first is an unnamed entity, and the second is the Tai Chi entity. The bottom line is that Binance will use its U.S. entity to funnel revenues back to Binance.com.
Furthermore, the document also revealed that Binance would pursue and hold high-level talks with regulators. While doing this, the document repeatedly stated that it would do this “with no expectation of success”.
Joining self-regulatory bodies based in the U.S.
Lastly, the document showed Binance’s also plans to join self-regulatory bodies/associations. To this effect, Binance is on record to have joined the growing Chicago DeFi Alliance and Blockchain Association. The latter had Coinbase as its founding member. However, Coinbase pulled out of the advocacy group as soon as Binance joined as a member. It didn’t, however expressly state that it was due to Binance joining that made it exit the body.
The Forbes publication ended on the note that the FBI and other regulatory authorities have started looking into these claims. The document has also been widely circulated across several law firms who are dissecting it. Perhaps they are looking for culpability by Binance.
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