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Amid rising global inflation and fear of a worldwide banking crisis, the demand for risky assets, including Bitcoin, has significantly spiked in the recent past.
Crypto exchanges have been outlawed in mainland China since 2017, while digital assets like Bitcoin were banned in 2021. However, mainland China residents are eager to participate in the global financial revolution by all means. According to a report by media outlet CNBC, some Binance employees have been showing mainland China residents how to circumnavigate the company’s Know Your Customer (KYC) feature.
Reportedly, Mainland China residents have been shown how to forge bank documents and provide false proof of physical addresses. Binance employees and Angels have, ostensibly, informed Mainland China residents about activating their Virtual Private Network (VPN) and registering as Taiwanese residents, then switching their nationality back to mainland China. Additionally, proxy users are also guided to a specialized VPN-free domain name and to a version of the Binance app for Android, specifically tailored for customers in mainland China seeking Bitcoin and crypto exposure.
Binance KYC Questioned amid Global Bitcoin Adoption
Amid rising global inflation and fear of a worldwide banking crisis, the demand for risky assets, including Bitcoin, has significantly spiked in the recent past. Moreover, a ban on Bitcoin is not technically viable based on global adoption and the high decentralization of the node validators.
Reportedly, Binance employees, volunteers, and customers also shared video guides and documents that showed mainland residents how to falsify their country of residence in order to obtain Binance’s debit card
As a result, security experts are worried that terrorism and money laundering will dilute Binance’s genuine customers in the process. Moreover, it is very easy for a hacker from North Korea to create a Binance account and launder stolen coins.
“If I had an eight out of 10 concern about Binance from a regulatory perspective and from a national security perspective, this takes it to a 10 out of 10,” Duke University professor and former FDIC chief innovation officer Sultan Meghji
However, a Binance spokesperson refuted the claims that the exchange employees are helping Mainland China residents subvert the existing government laws.
“We have taken action against employees who may have violated our internal policies, including wrongly soliciting or making recommendations that are not allowed or in line with our standards. We have strict policies requiring all users to pass KYC by providing us with their country of residence and other personal identification information,” the spokesperson told CNBC.
The Bitcoin market has significantly grown despite several bans from Mainland China. Already Bitcoin is used as legal tender in El Salvador and the Central African Republic. With more countries and states recognizing Bitcoin as a digital instrument with intrinsic value, the Chinese government is bound to ease its crypto ban to attract international investment.