By
Chimamanda U. Martha
April 25th, 2024
Binance Exchange has detailed its plans to restrict the accounts of many of its customers, a move it believes will aid its compliance efforts.
Binance Holdings Ltd, one of the world’s biggest crypto exchanges is currently in the news as it announces plans to restrict accounts without Know Your Customer (KYC) verification. According to the announcement, only verified and compliant customers will be granted access to their sub-accounts.
Accounts Under Scrutiny by Binance
Customers who face the chance of being restricted are sub-accounts created by Exchange Link account holders under the Binance Link Program. This is in addition to non-trading accounts created specifically for asset deposits.
Accounts that have failed to comply with KYC criteria since March 20 have been restricted, while unverified sub-account holders have received an ultimatum. Binance added that non-compliant sub-accounts will suffer complete limitations on May 20, preventing them from using Binance Link Program services.
Exchange Link account holders have been given a KYC link, where they can provide additional user information such as proof of address, source of funds, and source of wealth on behalf of their sub-account holders.
According to the announcement, the restriction on non-compliant customers’ accounts would cover areas such as services, deposits, withdrawals, spot trading, futures trading, and margin trading. Binance highlighted that in some instances sub-accounts may be frozen and access to the account blocked.
Another instance stated by Binance is that restricted sub-account holders may be unable to receive deposits. In such a scenario, the exchange noted that it may take up to 45 days to refund the misplaced deposit. However, this will come at an administrative charge of $200 regardless of the deposit size.
Binance Faces Regulatory Challenges
The move by Binance highlights its commitment to ensuring safe and secure regulatory requirements on its platform. Recently, there have been concerns relating to money laundering, and terrorism financing practices in the exchange.
In Nigeria, Binance faces allegations of money laundering and tax evasion. According to the tax office, the aforementioned acts are illegal and punishable under Sections 8 and 29 of the VAT Act of 1993 (as amended), Section 40 of the FIRS Establishment Act, 2007 (as amended), and Section 94 of the Companies Income Tax Act (as amended), respectively.
As previously reported by Coinspeaker, Nadeem Anjarwalla, one of the key executives at Binance Nigeria, has managed to escape police custody. Anjarwalla alongside the financial crimes’ compliance officer Tigran Gambaryan was arrested and detained on February 26, 2024.
The Nigerian government charges Anjarwalla and Gambaryan with operating Binance Nigeria without registration with the Federal Inland Revenue Service (FIRS). In a recent development, The Economic and Financial Crimes Commission (EFCC) said it will prosecute Binance and the two top executives on Thursday, 4th April 2024. Following the hearing, the case was further adjourned to April 19.
Overall, Binance’s new KYC implementation on sub-account holders is indicative of a proactive measure to ensure a safe compliance trading ecosystem going forward. Despite ongoing regulatory hurdles it needs to climb, the future appears bright for the exchange.