Binance Denies Report It Was Blocked From Installing Its CEO on Board of Failing Bank

Crypto exchange Binance said the FMA had not rejected an application for CEO Changpeng Zhao to join the board of the now-defunct Union Bank.

AccessTimeIconAug 11, 2020 at 4:14 p.m. UTC
Updated Sep 14, 2021 at 9:42 a.m. UTC
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Binance said reports Liechtenstein authorities blocked a deal to put its CEO, Changpeng Zhao, on the board of a now-defunct bank are unfounded.

On Monday, Swiss newspaper Inside Paradeplatz reported Liechtenstein's Financial Market Authority (FMA) had rejected an application in July by Union Bank to put Zhao on its board in a bid to rescue the company from imminent liquidation.

But speaking to CoinDesk, a Binance spokesperson denied a deal had been blocked by the FMA and that there was no application to bring the exchange on as a major shareholder of Union Bank. "Binance did not try to invest, and did not try to put CZ on the board," they said in a Telegram message.

In a statement, Binance's CFO Wei Zhou said it had not tried to acquire Union Bank nor put anything in front of the FMA for approval.

Binance's spokesperson, however, declined to comment on whether reports covering the deal were factually inaccurate.

Local media reported in 2019 that Union Bank laundered funds from a sophisticated scheme tied to Venezuela's state oil company. As a result, its chief executive was forced to leave and the bank was left scrambling trying to find new backers.

According to Monday's report, which has been picked up by other outlets, Binance planned to use some of its crypto reserves to invest through a local entity, funding the bank's pivot to become a platform for cryptocurrency investors.

The FMA was reportedly concerned with the deal's complexity as well as Binance's apparently uncooperative attitude in providing necessary information. It also transpired that a local partner, who had guaranteed the funds in question were clean, had apparently been suspected of fraud.

Per Inside Paradeplatz, the deal was blocked by the FMA in mid-July. On Monday, Union Bank put a note on its website saying it had entered voluntary liquidation. Although it didn't disclose specifics, the note says the board had, in vain, tried to put the bank's activities under a new "anchor shareholder" who would provide funds necessary so the bank could meet the minimum capital threshold.

An FMA spokesperson told CoinDesk it assessed prospective shareholders on their reliability and financial soundness as well as whether approving the deal would likely increase the risk of money laundering and terrorist financing.

The FMA said it does not comment on individual cases.


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