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Is Binance A Chinese Company? Here’s What CZ Has To Say

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Binance’s Chief Executive Officer Changpeng “CZ” Zhao has responded to claims over being a Chinese firm. CZ penned down a detailed post offering a rebuttal to the allegations. The top executive criticized the media’s efforts to malign its reputation by portraying it as a company with connections to China.

One of the many strengths that our employees at Binance must possess is thick skin. After all, this industry is the subject of a lot of negative sentiment (much of it is unwarranted, but it’s the reality right now). In recent months, our thick skin has been tested by a noticeable increase in attacks on our company’s reputation.

He lamented that people would still insist on calling it a “Chinese company,” despite establishing itself as a global firm with diverse employee profiles similar to that of FTX, and Crypto.com.

Zhao also took a critical note of the negative campaigns orchestrated by crypto exchanges and projects to target competitors and said these types of attacks are becoming more sophisticated.

“And while it is tempting to launch counter-attacks on the industry’s bad actors who engage in these activities, we will not debase ourselves nor abandon our values,” he added.

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Is Binance A Chinese Company? Here's What CZ Has To Say 2

It is worth recalling that a self-proclaimed whistleblower CryptoLeaks recently published a report alleging Avalanche labs for exploiting litigation to cast doubt on rival blockchain projects. Binance too was served a legal notice at the behest of Ava labs, the report alleged.

“Binance Was Never Incorporated In China”

While Binance has at times shifted its corporate headquarters around the globe, CZ has maintained that the exchange was never incorporated in China.

He also stated that the firm has subsidiaries spread across the globe, including France, Spain, Italy, UAE, and Bahrain [to name a few].

“But we don’t have any legal entities in China, and we do not have plans to.”

According to CZ, it is incorrect to presume that the exchange is “secretly in the pocket of the Chinese government” simply because he is of Chinese ancestry and there are other ethnically Chinese employees.

He referred to Binance as a simple target for Western governments, as well as oppositional media and special interest groups.

Nearly 12,000 Bitcoin and crypto akin Weibo, Baidu accounts revoked by China regulator

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It is well known that China has ruthlessly destroyed major Bitcoin mining powerhouses and implemented a comprehensive ban on the industry.

China emerged as one of the first nations to embrace the business, although the majority of the world’s population knew very little about the crypto-verse. Now that every country seems to be moving into the sector, China decided to outlaw all things cryptocurrency.

Despite this, a number of Chinese locals persisted in expressing interest in the market. But it was obvious that China wanted to minimize all things crypto-related. As a result, the Cyberspace Administration of China decided the decision to delete nearly 12,000 social media profiles associated with cryptocurrencies.

china and bear
Source: TWJ

The Chinese government has made a lot of noise about its position in the sector. The bear market reinforced this idea as Bitcoin fell below the $20K barrier.

But even before the apex of the bear market, China’s National Cyberspace Administration had begun to take safeguards. The regulator then addressed false information that was being spread on social media to promote cryptocurrency.

It was revealed that the same reason led to the closure of over 12,000 Weibo and Baidu accounts. Additionally, more than 51,000 pieces of illicit information were removed. This featured material promoted “Easy money-making with Bitcoin investments.”

Additionally, 105 of the 500 or so websites that were examined were taken down. According to reports, these websites produce courses on cross-border currency speculation, information on crypto mining, and endorsements of cryptocurrencies.

Given China’s opposition to Bitcoin, the most recent report is not shocking. It is likely that the Chinese government will keep its ban on all cryptocurrencies in the area.

Is Chinese Bitcoin activity still going strong?

Several stories of underground mining in the nation have appeared despite the ban. It appears that there is still some BTC-related activity in the area.

According to local reports, due to legislative ambiguity and recurrent zero-Covid lockdowns in China, some Web3 firms with roots within the country are in the process of moving to Singapore.

However, not all Chinese Web3 companies want to leave. Building blockchain infrastructure businesses are probably going to stay, as Beijing has expressed support for such ventures.

Bitcoin bears scare China’s crypto market

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Numerous predictions about Bitcoin [BTC] have been made possible by the start of the bear market. A few people appear to be certain that this bear market is the end of the king currency, while others seem to think that this setback is simply a catalyst for a potential bubble. Several nations proceeded to implement market restrictions as these forecasts poured in, but one country persevered in its animosity toward bitcoin.

The history of the world’s largest cryptocurrency in China is noteworthy. China at first became a BTC hotspot. The nation provided the most well-known crypto platforms, and for the longest time, it saw the biggest level of crypto activity. The industry’s degree of decentralization, meanwhile, did not sit well with the Chinese government. As a result, the nation later said goodbye to all things cryptocurrency. China still records activity in mining and trading despite this.

As a result of the market’s decline, the Chinese government continued to terrorize its populace by claiming that the world’s largest cryptocurrency would soon reach zero. According to a recent article from the news portal for the Chinese people, Economic Daily, “Bitcoin was nothing more than a string of digital codes.” Users were informed by the site that purchasing low and selling high were the primary methods for generating returns. The newspaper further stated,

“In the future, once investors’ confidence collapses or when sovereign countries declare Bitcoin illegal, it will return to its original value, which is utterly worthless.”

Saylor’s lifeboat- Bitcoin

Michael Saylor of Microstrategy has frequently stated his support for Bitcoin. Saylor has been a well-known BTC advocate, holding onto his money and encouraging others to buy additional BTC. Saylor was bullish once more despite the collapse of the biggest cryptocurrency in the world. He said,

“Bitcoin is a lifeboat”

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Michael Saylor, CEO of Microstrategy

Furthermore, there is a significant gap in the market as BTC prices keep falling. Although the future of the cryptocurrency is uncertain, the holders anticipate a potential rise. At the time of writing, Bitcoin (BTC) was priced at $20,597.97 with a daily rise of 1.36%.

Following Terra’s Demise, China’s State Media Notifies Stringent Crypto Regulations

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Following the demise of the Terra ecosystem, China’s state-owned media source, the Economic Daily, has suggested that the Chinese government may impose even stricter rules on cryptocurrencies and stablecoins.

The source revealed the collapse of TerraUSD (UST) and Luna (LUNA) in a story published on May 31, describing the algorithmic stablecoin’s workings. It took advantage of the so-called black swan occurrence to applaud China’s move to ban bitcoin.

“My country has been cracking down on virtual currency trading speculation and a large number of trading platforms.”“This has effectively blocked the transmission of this risk in China and avoided investment risks to the greatest extent possible.”

Reporter Li Hualin

Will China restrict crypto further?

Following the Terra collapse, Hualin explained that “many other countries” are looking to control stablecoins, citing Zhou Maohua, a researcher at the China Everbright Bank, to argue for more limitations within China:

“In the future, our country will also speed up the completion of regulatory shortcomings, and introduce targeted regulatory measures for the risk of stablecoins to further reduce the space for virtual currency speculation.”

Since mid-2021, China’s government has been toughening its position on cryptocurrency after outlawing crypto exchanges in 2017. Several government authorities have warned against investing in cryptocurrency, and there has been a massive crackdown on cryptocurrency mining in the country.

Colin Wu, a China-based cryptocurrency reporter, clarified the ban, saying that while the rules bar institutions from providing crypto services, “they do not prohibit regular people from utilizing cryptocurrencies – there is no specific law against it.”

Bitcoin (BTC) is subject to property rights, rules, and regulations, according to a Shanghai court, since its value, scarcity, and disposability satisfy the criteria of virtual property.

When it comes to how traders get their hands on cryptocurrency in the first place, Cointelegraph recently reported on the growing use of VPNs among Chinese traders. Traders began increasingly using offshore exchanges or peer-to-peer (P2P) networks for all of their activity after the previous wave of restrictions.

However, the Chinese Communist Party-controlled publication stated that regulators in other nations should “strive to develop worldwide general standards” to increase surveillance on cross-border payments.

China’s BSN Blockchain Ready For Global Expansion Despite ‘Challenges’

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China’s blockchain-based service network a.k.a BSN is eyeing its first major international expansion, according to a CNBC report. CEO Yifan revealed the firm’s plan to launch a project called BSN Spartan Network overseas sometime in August.

The Hong Kong-based firm boasts itself as a “one-stop-shop” for blockchain cloud applications. It aims to bridge different blockchains together to help businesses deploy the technology.

Even though Chinese President Xi Jinping has doubled down on Blockchain technology, elevating it to a national priority, it is strictly against any cryptocurrencies other than Digital Yuan.

Due to this, the Spartan Network will rely on half a dozen public blockchains that do not operate with cryptocurrencies. One of those will be a non-crypto version of the Ethereum blockchain when the project launches in August.

Yifan also confirmed that the Blockchain transactions fee will be paid in U.S. dollars rather than Ethereum’s related cryptocurrency called ether.

“The purpose of this is to drop the cost to use public chains to very minimal so that more traditional IT [information technology] systems and business systems can use public chains as part of their systems. That is why we are working with other major public chain protocols to convince them the mainstream is non-crypto public chains.”

More hurdles for BSN ahead

Being a blockchain firm and not dealing with cryptocurrencies will have its challenges. The CEO admitted that the initial years will be “difficult to push as most people in the blockchain industry only understand crypto.

Not only that, as it is backed by the Chinese government, foreign firms would likely be a bit hesitant to do business with the firm.

But Yifan begged to differ saying, “People will say BSN is from China, it is dangerous. Let me emphasize, BSN Spartan will be open source … we will not access anything from our end.”

“That is why when we a launch in August we will open-source immediately and we are working with a lot of western companies,” he added.

On the other hand, here is some good news for Bitcoiners.

China’s iron hold over Bitcoin miners from running operations in the country seems to be wavering. Data from the Cambridge Bitcoin Electricity Consumption Index [CBECI] showed that activity has picked up again and the nation is now the second-largest Bitcoin miner, after the US.

China Regains the Title of the 2nd Top Bitcoin Mining Hub

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According to recent research, China failed to implement its cryptocurrency prohibition last year, and the country has since resurfaced as one of the world’s main Bitcoin (BTC) mining hubs.

China became the second-largest Bitcoin hash rate supplier in January 2022, according to the Cambridge Bitcoin Electricity Consumption Index (CBECI), months after local officials banned all crypto operations in the country.

According to data, Chinese bitcoin miners generated 21.1 percent of the entire global BTC mining hash rate distribution in early 2022, behind only the United States, which generated 37.8% of the total hash rate in January.

China once hailed the bitcoin mining industry

In 2019, China was the world’s largest Bitcoin mining country, accounting for more than 75% of worldwide BTC hash rate power. In July and August 2021, the hash rate decreased to 0% after a string of crypto mining farm closures around the country.

Despite the crypto ban in September 2021, the hash rate share climbed to 22.3 percent in that month and never went below 18 percent during the research period.

The new data, according to CBECI project leader Alexander Neumueller, is sufficient to prove that Bitcoin mining is still active in China.

Kazakhstan, the world’s third-largest BTC mining center, sees a modest reduction in hash rate share, according to the latest CBECI data. Kazakhstan’s contribution to the BTC hash rate fell from 18 percent in August to 13.2% in January.

Miners are currently mining up to 9% of the global BTC hash rate in unspecified places, according to CBECI statistics. With 6.5 percent and 4.7 percent, respectively, Canada and Russia are the next two largest mining centers.

Russia has dropped out of the top three nations in terms of BTC hash rate power, as well.

The most recent CBECI update provides more granular statistics on hashrate distribution in the state’s main Bitcoin mining market.

According to the figures, Georgia, Texas, and Kentucky have the greatest hash rate, accounting for 32 percent, 11.2 percent, and 10.9 percent, respectively. These three states collectively account for more than half of the overall hash rate in the US.

States like New York, California, North Carolina, and Washington, according to data, have major mining activity.

Bitcoin Is Now Identified as a Legal Virtual Asset Property by the Shanghai High Court

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A recent judgment from China’s Shanghai High People’s Court has given the country’s experiment with cryptocurrency a fresh twist. While China’s expulsion of crypto miners and other judgments had effectively restricted crypto trading and associated operations within its borders, the Shanghai ruling may provide some relief to the community.

The judgment in question found Bitcoin to be a virtual asset with economic value that is protected by Chinese law. “The People’s Court has established a unanimous view on the legal position of bitcoin in actual trial practice and designated it as a virtual property,” it wrote on its official WeChat channel.

In China, the highest municipal court is the high people’s court, which is preceded by the people’s courts and intermediate people’s courts.

They are directly controlled by the central government and have a structure that is identical to that of the Supreme People’s Court, which sits above them. In China, the Supreme People’s Court is the highest court.

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Bitcoin Is Now Identified as a Legal Virtual Asset Property by the Shanghai High Court 6

China and Bitcoin

The High People’s Court was considering a lawsuit brought by Cheng Mou, another Shi Moumou, who was seeking the restoration of his (one) bitcoin. On October 10, 2020, Cheng Mou filed the complaint at Shanghai’s Baoshan District People’s Court, and Moumou was ordered to refund the bitcoin.

The defendant, however, declined to do so, and the case was sent to the Shanghai High People’s Court. While the case is still pending in China’s lower courts, the decision might be significant since it establishes a precedent for how virtual assets are viewed under Chinese law.

To date, the government has discouraged cryptocurrency trading and shunned miners in an effort to minimize energy use and discourage the entire business.

“Virtual currency-related business activities are illegal financial activities,” the People’s Bank of China said in September last year. It also warned Chinese citizens that crypto trading could “seriously endanger the safety of people’s assets.”

According to Liu Yang, a lawyer from Beijing’s Deheng Law Firm, the high court’s declaration would serve as a reference judgment for civil issues concerning bitcoin in the Shanghai area.

China Chokes Crypto Market Tighter – Warning Illicit Activities

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China is limiting its digital asset market even further as officials fear that criminals are using the sector.

Three industry organizations in China have jointly released rules days after a Chinese media source called for swift monitoring of digital collectibles.

On Wednesday, China’s government-run organizations, the National Internet Finance Association of the country, the Banking Association, and the Securities Association issued warnings to financial institutions against enabling ‘illegal’ NFT trading.

Last year, these government-backed organizations took a tough stance against the Chinese cryptocurrency sector. China then outlawed initial coin offerings, bitcoin mining, and cryptocurrency transactions.

China’s NFT market is getting pretty popular

NFTs are ownership certificates for a one-of-a-kind digital property, such as a video, song, or artwork. Digital artifacts are gaining hold in China, and tech giants such as Ant Group and Tencent Holdings have welcomed them.

Although NFTs might help China’s digital economy, the trio warned that they could also lead to speculative trading, money laundering, and illicit financing. Last year, the trio also declared a combined ban on cryptocurrency trading.

The statement, which was published on the country’s Banking Association’s website, stated that NFTs must not be utilized to issue financial assets such as securities, insurance, loans, or precious metals.

Members of the trade groups were also prohibited from providing trading venues or financing for NFTs.

The statement states that cryptocurrencies cannot be used to price or settle NFTs, and real name identification is necessary for anti-money laundering purposes for NFT issuers, purchasers, and sellers.

Online marketplaces have been launched by Chinese technological titans such as Jack Ma’s Ant and video game maker Tencent (0700.HK), and a rising number of enterprises are researching NFTs.

Xtep International produced its first digital running shoe collection this month, while the official Xinhua news agency presented a digital media photo collection via NFTs last year.

China has yet to establish a regulatory framework to control the trade of NFTs in the nation.

Despite some of these legal difficulties, Broadcaster Shandong Television, a Chinese television network, is apparently building an NFT marketplace. Xinhua News Agency has previously made a similar declaration, highlighting government-owned media businesses’ involvement in the NFT market.

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China to maintain its status quo on the crypto ban

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The People’s Bank of China [PBoC] has reaffirmed that it would continue its policy of banning crypto speculation in a statement released from its meeting that was convened on 4th March 2022. The annual meeting led by PBoC has outlined regulatory priorities for the country’s financial market in the coming year.

The conference was attended by the heads of local banks, the National Internet Finance Association of China, foreign currency settlement, and clearing services providers, the top bank said in the statement.

China had executed one of the most comprehensive crackdowns on crypto trading and mining last year, forcing major crypto exchanges and mining companies to shut down their operations. Primarily led by the country’s top regulators who have instructed commercial banks to stop offering services to trading platforms such as over-the-counter trading desks and exchanges.

Those who refused to obey had their bank accounts blacklisted or canceled making crypto platforms unable to cash out on tokens or offer a fiat on-ramp to their users. In order to keep an eye on defaulters, the financial agencies also teamed up with the police to monitor and track cross-border transactions from trading platforms. 

China’s share in Bitcoin transactions down by 80%

According to a report released by the Financial Stability Bureau of the Chinese central bank on 2nd March 2022 that discussed the impact of the crypto crackdown on the financial markets. The translated note claimed that all peer-to-peer exchanges in the country had been eradicated from 90% to 10%.

China has continued to maintain an outright aggressive stance against crypto use since the beginning. The first ban came in 2013 when it prohibited banks from handling Bitcoin transactions. It has carried out multiple crypto crackdowns and enforced numerous bans on crypto markets since 2013, but Chinese investors have always found a way to evade these bans.

Another ban on local cryptocurrency exchanges in 2017, forced them to shut their operations completely. The country later intensified its crypto crackdown efforts in 2021, when it carried out elaborate regulatory operations to eradicate Bitcoin mining from the country and by September 2021, it had deemed all digital asset transactions illegal.

Supreme court of China rules out crypto transactions as illegal

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On Thursday, China’s supreme court declared cryptocurrency transactions to be unlawful, threatening violators with steep penalties and up to ten years in jail.

While top-level Chinese government authorities had previously declared crypto illegal in 2021, the measure now makes it technically illegal, allowing the government to pursue dealers in court.

In September of last year, following a severe energy deficit, the nation imposed restrictions on crypto mining and commerce. Several businesses were forced to relocate to Singapore or shut down entirely due to the migration.

China had previously been the world’s largest crypto miner. Following a similar restriction in Kazakhstan, markets now perceive Russia as a major, up-and-coming player in crypto mining.

What does China’s new rules mean for crypto investors?

For major transactions, the court’s new order now specifies jail terms of three to ten years and penalties of 50,000 yuan ($7918.28) to 500,000 yuan.

Fines for smaller transactions range from 20,000 to 200,000 yuan. The new law will take effect on March 1st.

The supreme court’s decision also puts an end to rumors that the country would not entirely ban crypto in the nation. Eastern Zhejiang province recently increased power costs for cryptocurrency miners, implying that the government attempted to discourage crypto mining through high bills rather than legal action.

The action did not affect the crypto market, though, as the attention remained on Russia-Ukraine tensions. Markets had recovered overnight as stocks confidence increased.

China’s stance on cryptocurrencies should not be misinterpreted as an indication that it is ready to ignore the fundamental technical revolution that blockchain technology and tokenization have brought about.

The country is nearing the end of its digital yuan tests, which have already begun in several pilot projects around the country.

During the second half of 2021, a digital form of the country’s national currency, the digital yuan, was utilized in over $8 billion in transactions.

China’s measures to control and restrict crypto usage on its land are likely aimed at reducing the number of citizens and organizations using decentralized blockchains to conduct business.

The Russia-Ukraine conflict and China’s cryptocurrency rules appear to have impacted the entire cryptocurrency market. However, cryptocurrency remains a lifeline in conflict situations.