Binance ‘Angels’ Helped China-based Users Evade KYC: Report

Binance employees reportedly helped some users in China skirt local regulatory controls meant to keep locals out of the top crypto exchange.

China’s central bank declared all crypto transactions illegal in 2021, a move that essentially restricted international crypto exchanges from the region.

But CNBC has reported details of Binance’s Discord and Telegram official chatroom histories. The outlet found accounts identified as Binance employees (or Binance-trained volunteers known as “Angels”) had taught China-based users methods of avoiding know-your-customer (KYC) checks and verification systems. 

These approaches involved falsified documents such as forged bank statements and wrong addresses, CNBC said.

Mainland China residents were reportedly sent video guides and other resources by employees, volunteers and other customers, showing them how to fabricate their country of residence so they could get access to the exchange’s debit card. 

A Binance spokesperson told Blockworks that the exchange has taken action against employees who might have violated its policies that include giving advice against internal standards. 

“We have strict policies requiring all users to pass KYC by providing us with their country of residence and other personal identification information,” the spokesperson said, adding that employees are unauthorized to support users in skirting local laws or regulatory policies and that they would be “dismissed or audited” if found to be in violation. 

They didn’t respond to a query on how many employees were involved in the matter.

Alongside reported crackdowns on local and foreign crypto exchanges operating in the mainland, Chinese officials have repeatedly warned residents to steer clear from the digital asset market. 

KYC checks and other anti-money laundering measures are key to disallowing users from either sanctioned countries or those where trading is deemed illegal. 

Binance and restricted jurisdictions

Binance had been blocked in China since 2017 when local crypto exchanges were ordered to cease operations. After the 2021 ban, Binance told Insider it didn’t hold exchange operations in China and that the Binance app is not available for downloads there. 

Reuters previously reported that Binance accommodated crypto traders in Iran on its platform despite US sanctions and a company ban. At the time, Binance’s global head of sanctions, Chagri Poyraz said traders can manage to avoid geographical restrictions through the use of virtual private networks (VPNs).

A Binance spokesperson told Blockworks the company has implemented detection tools to crack down on users in restricted and sanctioned regions that had access to sophisticated masking tools, including VPNs.

“Users who are found to have used any sort of workaround to avoid local law are restricted immediately,” they added. 

“However, it is extraordinarily rare for users to be able to implement workarounds as we have multiple manual and AI-driven processes to ensure users cannot circumvent these processes, and AI processes cannot circumvent these processes.”

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