BC sees risk of laundering in operations of Binance, the largest cryptocurrency exchange in Brazil

The Central Bank notified the bank Acesso, responsible for the transactions of the leading brokerage of the Brazilian cryptocurrency market Binance, about the high risk of money laundering in the operations and demanded the submission of detailed information about the clients.

The pressure comes at a time when the National Congress is about to vote on the bill that creates rules for the cryptocurrency market. The BC wanted stricter rules, but gave in as a way of guaranteeing the approval of the proposal before the parliamentary recess.

However, instead of complying with the determination, Binance chose to switch partners. In place of Capitual, the financial arm of the company with the Acesso bank, it chose Latam Gateway, which operates with the BS2 bank.

Amid pressure from the BC, the companies entered into litigation. At the heart of this dispute are, on the Binance side, accusations of coercion and customer theft and, on the Capitual and Access side, suspicions of laundering operations against the exchange.

Today, cryptocurrency exchanges need to have a financial partner, such as a bank (regulated by the BC), to carry out operations, but the money moved by customers does not need to circulate in individual current accounts.

All Binance transactions, for example, go through a graphic account, a kind of bus-current account that carries all customers inside. This operation had been carried out by Capitual and Acesso until it was discontinued last month.

The problem, according to the BC, was that Binance moved BRL 40 billion in 2021 without Access, the regulated institution, having any control over who the customers were and whether the origin of the funds was lawful.

Binance was one of the companies used in the fraudulent financial pyramid scheme attributed to former waiter Glaidson Acácio dos Santos, known as the “bitcoin pharaoh”. He was arrested by the Federal Police in the Kryptos operation.

In the document sent to the bank, to which the Sheet had access, the BC determined, in May of this year, that the bank would be able to identify each Binance customer, a way to avoid the use of cryptocurrencies in fraudulent operations, money laundering and even financing of criminal organizations.

Through its advice, Binance denied any type of determination by the BC, either to it directly or to the bank Acesso or Capitual.

A lawsuit between Binance and Capitual that is being processed in São Paulo under judicial secrecy indicates that the Binance partner had been using the BC notification to the Acesso bank to pressure Binance to open individualized checking accounts on the grounds that this would be the only way to meet the regulator’s requirement.

Instead of having a single account, Binance would need to migrate to a new model of one account for each customer. If she took this further, she would have her client base open to her operating partners, something she didn’t want.

The company, which in Brazil concentrates 52% of operations involving cryptocurrencies, such as bitcoin and ethereum, maintained suspicions that Capitual and Acesso intended to take their customers.

According to reports, some of these customers mentioned to Binance that they were approached by Capitual employees, which the company denies.

In messages from company executives, transcribed in the action, a representative of Capitual states that, as required by the BC on Access, it would be necessary to individualize current accounts.

The Binance executive replied that it would be impossible to have approval from her superiors outside Brazil within 45 days, a period that, according to Capitual, had been given by the BC.

In the conversation, the Capitual executive then said that the technological system for the system supposedly required by the BC was ready, but that it would be necessary to sign an exclusivity contract, a way to prevent investments from being lost later.

Binance takes this as coercion in the conversation and demands that matters be handled separately.

Behind the scenes, the company said that it could not make any decision without knowing whether, in fact, the BC had demanded this “individualization of accounts”.

In the document to which Sheet had access, the regulator imposes the opening of customer data for Access, not necessarily for Capitual.

It mentions, however, only the need to know the customer, a kind of registration form, without mentioning the opening of individual accounts.

The BC wants the bank to know, for example, who the customer is, where he works, how much he earns and what type of transaction he usually does, as a way of identifying possible practices linked to money laundering.

The result of this discussion is that Binance managed to block the funds moved by Capitual in court, the equivalent of BRL 450 million, while changing partners, which occurred last week.

Binance considers that at no time was it asked to individualize accounts. The company states, through its advisory, that “it is not a customer of Acesso and that it has never been informed about any request from the Central Bank for individualization of accounts”.

Binance also says that it has robust tools and processes to ensure the security of operations for all users.

“The company has a world-renowned investigative team, with former international agents, who work in constant coordination with local authorities in combating cyber and financial crimes, including pre-emptive tracking of suspicious accounts and fraudulent activity,” the company said. via advice.

Regarding Capitual, Binance said the company is no longer its “share-based” payments provider. [da Capitual] that conflict with its values, and that it has taken all necessary and reasonable steps towards the company to protect users and their resources and ensure that they are not adversely affected by the change”.

However, he said he would not comment on the process, because it remains under judicial secrecy.

The Capitual also declined to comment. Through its advisory, the company informed that the measures under discussion with Binance were aimed at adapting Access to the standards required by the BC.

Sought after, Access Bank did not respond until the publication of this report.