25 April, 2024

Binance Implements Rigorous Client Screening Amidst Operational Overhaul

19 Mar, 2024

19 Mar, 2024

  • Binance requires prime brokers to conduct thorough client screenings to prevent U.S. investor participation, reflecting its commitment to regulatory compliance.
  • The exchange underwent significant operational changes, such as revising token listing strategies and transforming Binance Labs into an independent entity.
  • Former CEO Changpeng Zhao announced Giggle Academy, offering free, gamified, and adaptive education to students globally.

Binance has tightened its client screening measures to block U.S. investors. This development, as reported by Bloomberg on Tuesday, involves Binance requesting prime brokers like FalconX and Hidden Road to enhance their vetting processes. 

These prime brokers are now required to gather and verify extensive information about their clients, including the geographic locations of their offices, founders, and employees. This decision comes in the wake of Binance’s guilty plea to U.S. charges last November, demonstrating the exchange’s efforts to comply with regulatory standards and avoid similar issues in the future.

The call for tightened screening processes follows a settlement with the U.S. Department of Justice last year, wherein Binance and its former CEO, Changpeng Zhao, admitted to violations of the Bank Secrecy Act. The company’s deliberate noncompliance with U.S. laws and regulations led to a significant penalty of $4.3 billion, as noted by Acting Assistant Attorney General Nicole M. Argentieri.

Parallel to tightening client screening, Binance has also updated its token listing strategies. The platform has implemented a longer “cliff period” for new listings, during which sales are not allowed. Additionally, it now requires a security deposit and a reserve of tokens for market makers to maintain liquidity. The previous ‘six-month’ threshold has now been extended to a minimum of one year. The decision seeks to provide much-needed stability to the volatile trading environment for newly listed tokens.

Binance Labs, the exchange’s venture capital arm, has also recently separated from the Binance family and established itself as an independent organization. Bloomberg drew attention to this move on March 15, which had been quietly disclosed on the Binance Labs website earlier this year. Notwithstanding the spin-off, Binance Labs will continue to function under the Binance brand in accordance with a license agreement, as stated by Investment Director Alex Odagiu.

At the same time, Changpeng Zhao, who stepped down as CEO in November, announced the launch of Giggle Academy on Monday, a new online education platform operating on a nonprofit basis. With this project, children in grades 1 through 12 will be able to access free, adaptive, and gamified basic education. In it, he laid out the plans for Giggle Academy, stressing that it aimed to transform education. He also directed interested parties to the Project Giggle website to access the concept paper.



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