Legislators Call on Ministry of Justice to Stop Cooperation with Binance
On June 12th, Financial Supervisory Commission (FSC) Chairman Huang Chin-lung reported on the progress of the “Special Act for Virtual Assets” during a meeting with the Committee on Finance.
During the meeting, Kuomintang legislator Wang Hung-wei strongly criticized the Ministry of Justice’s cooperation with the overseas exchange Binance and questioned whether this action would “whitewash” Binance’s reputation.
Wang Hung-wei pointed out during the questioning that Binance has faced legal penalties in multiple countries, including the United States, Canada, and India, and its involvement in money laundering and fraud has made it infamous internationally. The founder of the exchange, Changpeng Zhao, has even been sentenced in the United States for related crimes. However, since last year, the Ministry of Justice and investigative agencies have been cooperating with Binance to hold seminars on new forms of crime, such as cryptocurrency-related offenses. Wang Hung-wei questioned whether this cooperation is helping Binance “whitewash” its image.
In response, Deputy Director of the Ministry of Justice’s Prosecution Department Chien Mei-hui explained that the cooperation with Binance and other virtual asset exchanges is necessary for accessing the financial flow and transaction data required for cases. She emphasized that this cooperation is essential and that Binance has indeed provided the necessary information in certain cases.
However, Wang Hung-wei expressed dissatisfaction with the Prosecution Department’s explanation and pointed out that by simply searching for Binance online, one can find information related to fraud. She strongly urged the Ministry of Justice to stop cooperating with Binance and publicly questioned whether Taiwan should be promoting this kind of cooperation with international fraud groups.
“You have made mistakes, and yet you still insist on it. Stop cooperating with Binance! Stop engaging in these embarrassing international behaviors!”
Taiwan is indeed a fraud island! Are these overseas frauds coming to Taiwan to whitewash themselves? It truly is a complete fraud island. Should we promote this to the world?
Why cooperate with Binance?
Legislator Wang Hung-wei’s strong statements have drawn attention from the meeting and the cryptocurrency community. However, do her two main points, “Binance’s international infamy” and “Taiwan should stop cooperating with Binance,” really hold any merit?
Why cooperate with Binance exchange?
Although the methods of cryptocurrency scams are diverse, and the anonymous and cross-border nature of cryptocurrencies makes it extremely difficult to trace and locate scammers, regardless of whether fraud is conducted through exchange wallets or on-chain personal hot wallets, if fraud groups want to withdraw these digital assets, they must eventually go through an exchange and convert these cryptocurrencies into legal tender, such as USD or TWD.
Simply put, exchanges are often the last stop for investigating cryptocurrency cases.
When users discover that their assets have been defrauded, they can only cooperate with the police and domestic exchanges to freeze their accounts. Since exchanges require users to undergo Know Your Customer (KYC) identification during registration, the police can know “who withdrew the stolen funds” and subsequently trace the members of the criminal group.
Although domestic exchanges cooperate with Taiwanese police and prosecutorial agencies, many users use overseas exchanges such as Binance and OKEx. The Financial Supervisory Commission of Taiwan has not yet formulated a joint defense mechanism for virtual currency fraud funds. As a result, the cooperation between overseas exchanges and Taiwanese law enforcement agencies is limited, and many exchanges are unwilling to cooperate with Taiwanese law enforcement agencies.
Further reading:
With annual fraud of 5.3 billion NTD, can’t we really catch them? Criminal Investigation Bureau reveals four major case challenges
Why cooperate with Binance?
The number of users on the Binance exchange platform recently surpassed 200 million, making it the largest exchange in the world in terms of user base. In recent years, Binance has actively cooperated through judicial means by providing KYC data and assistance in criminal investigations.
From this, we can see that Binance’s assistance is crucial for Taiwan’s investigation of cryptocurrency fraud cases. If Taiwan were to stop cooperating with Binance, it would undoubtedly deepen the challenges faced by law enforcement agencies in investigating cases. It would also be unable to find a good solution to the rampant problem of cryptocurrency fraud.
Is Binance really “black”?
Binance founder Changpeng Zhao reached a comprehensive agreement with the U.S. Department of Justice on November 22, 2023, admitting to criminal charges of money laundering and violating U.S. sanctions. After resigning as CEO, Zhao paid a $50 million fine.
Before sentencing, Zhao stated, “I believe this is the first step in fully admitting mistakes and taking responsibility. I failed to establish a robust ‘Know Your Customer’ (KYC) system. I also understand the importance of having a sound KYC and anti-money laundering program. This is why I instructed Binance to cooperate with the U.S. investigation.”
According to Wen Hung-chun, the founder of BitYacht, in the past, Binance grew to become the world’s largest cryptocurrency exchange through aggressive growth tactics (not fully complying with regulations) and therefore carried the largest burden. Setting aside Zhao Changpeng’s personal ties to Chinese capital and the inconsistency with mainstream American values, Binance’s platform indeed has strong evidence of not reporting numerous money laundering transactions and terrorist financing records over the years. Wen Hung-chun added, “In other words, Binance will officially enter a period of debt repayment.”
Due to Changpeng Zhao’s active cooperation with the U.S. government, he obtained a good record. In May 2024, a U.S. judge handed down a light sentence of four months, bringing this globally watched lawsuit to a close.
Although Binance did commit mistakes, its past does not mean that the exchange is still “black” today.
Binance stated, “These agreements acknowledge the responsibility of our company for past violations of criminal compliance,” but also emphasized that the company has invested a significant amount of resources in compliance.
In recent years, Binance has actively cooperated with regulatory authorities around the world. Currently, Binance has obtained regulatory licenses in 18 different jurisdictions worldwide, making it the exchange with the most licenses in the industry.
Additionally, Binance has implemented law enforcement training programs worldwide to help law enforcement officers understand blockchain, cryptocurrencies, and other related knowledge, and improve their ability to handle cases. This initiative has received positive feedback.
It can be seen that Binance has placed significant importance on “protecting user assets’ security” and “promoting the sound development of the industry” in recent years. In many international cross-border major cases, it has become the police’s “best assist,” helping law enforcement agencies solve cases and recover defrauded assets.
With the popularity and widespread adoption of cryptocurrencies, related fraud cases have also increased dramatically worldwide, and Taiwan is no exception. Blockchain fraud cases constantly shift between physical and virtual realms and across national borders, making them even more complicated than traditional fraud cases. Therefore, establishing a cross-border joint defense network will become even more important.