Binance has made “grossly inaccurate” UK filings, joint venture partners claim

Binance has been accused by the co-owner of a UK subsidiary of filing a “grossly inaccurate” annual report for one of the UK companies linked to the world’s largest crypto exchange.

The directors of Dimplx, a UK company formed through a joint venture with Binance, said the 2020 financial statements for one of Binance’s UK companies “do not accurately reflect the nature of its business, revenue, assets and liabilities”. ‘, including potential tax liabilities’.

Dimplx, which made the allegation in its own filings this month with Companies House, the government’s main business register, raised questions about the role British companies play in the sprawling global operations of crypto, ahead of the Financial Conduct Authority’s scathing warning about crypto Binance played group last year.

The city’s regulator has repeatedly raised concerns about Binance, warning that its “complex and high-risk financial products [pose] a significant risk for consumers”. The FCA last year issued a consumer warning against Binance Markets Ltd, another UK subsidiary of the broader Binance Group, banning it from all regulated activities.

The FCA later said Binance failed to provide basic information about its global operations, such as: B. “Trade names and functions for all Group entities worldwide”. The exchange has said it intends to reestablish ties with the FCA and re-apply for UK regulation.

Dimplx’s allegations turn the spotlight on a second UK company, Binance Digital, and the nature of its operations in the UK prior to the exchange’s clash with the FCA. The subsidiary’s former co-owner’s claims against Binance have not been proven.

Binance and Dimplx formed a joint venture in the UK in 2019, but relations between the companies have soured since then. Dimplx said it intends to sue Binance over disputes arising out of their business dealings, but declined to provide details of its claims.

Binance said: “Given the threat of litigation from the minority shareholders, Binance is unable to fully respond to the allegations. However, we understand that the minority shareholders are disappointed that the joint venture has not borne fruit.”

Binance Digital was founded in November 2019 in the UK as a “payment processing broker,” according to its annual reports. It is 20 percent owned by Dimplx, a UK company set up by two South African-based entrepreneurs who describe it as a “joint venture company”. Binance founder Changpeng Zhao owns the majority stake.

Simon Dingle, a director of Dimplx, served on the board of Binance Digital until December 2020. In Dimplx’s annual report for the year ended February 2021, Dingle and his colleague Joshin Raghubar allege a spate of inaccuracies in Binance Digital’s 2020 accounts.

The entity had been named as “responsible for transactions” between crypto and all national currencies except the Turkish lira, according to archived copies of its terms and conditions on binance.com, the crypto exchange’s main website used by investors .

Binance’s filing indicated that Binance Digital would have around $100 million by the end of 2020.

Dimplx directors said they believe the £100million represents funds “held on behalf of Binance Digital clients who have visited binance.com”. They said customers transacting on binance.com are “obligated to pay transaction fees.”

However, according to Dimplx, the financial statements “recorded no revenue or fees in relation to all transactions made with a client during the financial year.”

Binance declined to say whether Binance Digital collected transaction fees from customers trading on binance.com and declined to explain the source of the £100m. Binance Digital’s 2020 financial statements state that no sales or income were reported during the year and the company paid no UK taxes.

Dimplx declined to comment.