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Crypto exchange Binance ordered to suspend operations in Japan

By Adam Samson in London and Leo Lewis in Tokyo From Financial Times

YESTERDAY Binance, one of the world’s biggest cryptocurrencies exchanges, has been ordered by the financial services agency in Tokyo to suspend its operations in Japan.

Japan’s Financial Services Agency on Friday issued a formal warning to Binance, with officials saying that they had ordered Binance to suspend its services to Japanese residents with immediate effect.

The regulator said that the exchange was operating in violation of Japan’s rules on fund settlement because it did not have the appropriate registration to accept business from Japanese residents. Changpeng Zhao, chief executive, told the Financial Times that the exchange is “working with the JFSA on solutions.” He declined to comment on whether Binance has halted operations in Japan.

Japan represents Binance’s second-largest user base by geography, but only accounts for 7 per cent of trading volume, Mr Changpeng said. “It’s not small, but nowhere close to majority,” he said.

Mr Changpeng added: “Either way, it will have zero impact on non-Japanese users.”

Despite being the location of two of the world’s biggest digital heists — the MtGox incident in 2014 and Coincheck earlier this year — the appetite of Japanese clients for cryptocurrencies remains among the most ravenous in the world.

Exchanges continue to occupy large billboard and other advertising spaces in Tokyo and other major Japanese cities, and on most days, Japanese trading represents the largest volume in the world.

The FSA’s statement did not mention a deadline, but officials said that they expected the suspension order to be complied with straight away. FSA officials added that the guidelines provided scope for them to mount a criminal case in the event of non-compliance, but said that they had made no decision on that so far.

The move by the FSA comes on the heels of a tumultuous two months for Binance. In February, an extensive system outage stoked concerns among traders that it might have been the victim of a hack. About a month later, Binance said it thwarted a “large-scale” attempt by criminals to manipulate the cryptocurrencies market and steal users’ coins.

Binance has been courting regulators around the world in recent weeks, including meetings with “senior” officials in the UK government, according to Mr Changpeng. He said in an interview last week that Binance is seeking a corporate home in a country that is supportive of the burgeoning digital currencies market.

The company which employs around 150 staff was first registered in Hong Kong, but has since moved its corporate registration to the Cayman Islands. Last quarter, Binance generated $200m in profits, mostly through trading fees, according to Mr Changpeng.

Mr Changpeng said on Friday that it is planning to open a branch office in Malta. Binance intends to open an exchange in the country that will allow users to trade digital currency for hard currency — a first for Binance.

Copyright The Financial Times Limited 2018. All rights reserved.

For more on this story go to: https://www.ft.com/content/4331aee0-2e75-11e8-a34a-7e7563b0b0f4

2 COMMENTS

  1. So, this author seriously needs to do better reporting and stop being a part of the problem by spreading FUD in the mainstream media. Nowhere was it ever said that Japan would be shutting down Binance. They were issued a warning, and so Binance will be moving to Malta. Why doesn’t she report that good news? Malta’s a pro Blockchain country and so Binance will be able to operate fine. Also, South Korea’s becoming more lax over crypto. If you do a very simple Google search with the terms Bitcoin South Korea, there are several positive articles about SK’s greater acceptance of this space. Journalists like those who wrote this article and throughout the industry need to stop writing such sensationalistic articles it’s ridiculous. I mean you’re all turning into Fox News with your manipulative agendas so seriously, cut it the fuck out.

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