Binance wants to set up HQs in Ireland, halts derivatives trading in South Africa

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After years of ducking any regulatory crackdowns by not having any physical headquarters, Binance exchange could finally be looking for a home in Ireland. However, in South Africa, regulatory warnings have forced the exchange to stop offering derivatives trading and leveraged tokens as regulatory walls close in on the cryptocurrency exchange.

Binance halts some services in South Africa

For a long time, the digital currency industry has not had clear regulations to guide firms on what services they can and can’t offer. As such, some have taken full advantage, flouting basic banking and financial laws to offer services that put the average retail investor at great risk, none more so than Binance.

The exchange, led by the controversial Changpeng Zhao (CZ), is now facing the music. It has been forced to cease offering many of these complex investment products to its users, from Germany to Hong Kong, and now in South Africa too.

In a recent announcement, the exchange revealed that South African users will no longer be able to access futures, margin, options and leveraged tokens. “With immediate effect, South African users will be restricted from opening new accounts for these products,” it added.

The exchange gave its users three months to reduce and close their positions for such products. “Users will be able to top-up margin balances to prevent margin calls and liquidations, but they will not be able to increase or open new positions,” it added.

“Binance welcomes developments to our industry’s regulatory framework as they pose opportunities for the market players to have greater collaboration with the regulators,” the exchange reiterated.

The move to cease offering these products came after the South African financial services regulator issued a notice warning the public that Binance was operating illegally in the country.

As CoinGeek reported last month, the Financial Sector Conduct Authority (FSCA) warned that the Binance Group is not “authorized to give any financial advice or render any intermediary services in the country.” Despite this, it had been offering services to South Africans, violating the local financial laws, and putting investors at risk.

Some banks in the country had also started prohibiting access to the exchange. One of these, Absa Bank, claimed this was because the exchange was non-compliant.

Will Ireland become Binance’s new home?

As regulators continue to crack down on Binance, one of the things they have taken an issue with is that the exchange, despite being valued at hundreds of billions of dollars, has no physical headquarters. Zhao has claimed that the exchange was fully embracing the decentralized nature of digital currencies when asked about it.

“When we first started we wanted to embrace the decentralised principles, no headquarters, work all around the world, no borders,” he said in one interview.

This lack of a physical address has allowed Binance to remain opaque in its operations and governance structure. Its holdings company is reportedly registered in the Cayman Islands (which incidentally launched a probe against the exchange in July) according to court filings in the U.K., but that’s about as much as is known about the global exchange.

The lack of a physical address has also allowed Binance to dodge quite a few legal actions. In its terms of service, it states that all legal proceedings against it must be handled by the Hong Kong International Arbitration Centre.

It looks like Binance is finally seeking to establish physical headquarters. Last month, the exchange registered three firms in Ireland according to corporate registry documents seen by Reuters.

Speaking to the outlet, Zhao said, “Historically, we claim that we don’t have headquarters. We are actually just in the process of establishing a few headquarters in different parts of the world.”

He further confirmed to Reuters that Ireland is one of the countries that the exchange is looking at for its headquarters.

“It’s very clear now to run a centralized exchange, you need a centralized, legal entity structure behind it,” he said.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—a from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple and Ethereum—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.