BKEX, a British Virgin Islands (BVI) exchange allegedly linked to Binance, is collaborating with law enforcement to investigate user funds allegedly linked to money laundering. The company suspended withdrawals to prevent misuse of funds during the investigation.
British Virgin Islands do not organize BKEX
The exchange claims to comply with all money laundering policies. Specifically, the company is registered but unregulated in the British Virgin Islands. The British Virgin Islands Financial Services Commission (BVIFSC) oversees money laundering compliance in the region. The licensing regime puts emphasis on how a cryptocurrency is used. It also takes into account the business activities and Initial Coin Offerings of a crypto platform.
BVIFSC Awarded Highest Risk Score for Moving Funds to Cryptocurrencies | Source: BVIFSCAdditionally, the BVI does not levy corporate or income taxes. Also, it does not require reporting for cryptocurrency transactions. BKEX’s trading volume has increased by 64% in the last 24 hours, reaching $495 million, according to CoinGecko. The exchange accounts for 1.5% of the global trading volume. Meanwhile, the highest activity stems from South Korea, Venezuela and Pakistan.
In 2019, defunct market maker Alameda Research claimed that BKEX imitated Binance’s order book. Thus, he claimed that his exchange artificially inflated its trading volumes. According to experts, this is because higher volumes are causing it to rank higher on crypto data aggregators such as CoinGecko and CoinMarketCap.
Last year, Asian exchange Huobi joined BVIFSC’s fintech regulatory sandbox. It later obtained an investment operating license that allowed it to offer crypto derivatives. FSC has registered defunct Singapore hedge fund Three Arrows Capital as a professional fund.
Allegedly linked to Binance is cause for concern!
The BVIFSC recently warned companies in the region to carefully monitor their interactions with countries on the Financial Action Task Force’s gray list, including South Korea. BKEX’s early connections with Binance suggest they will likely share a money laundering review.
Earlier this year, US Senators accused Binance of being a breeding ground for illegal activities. cryptocoin.comAs you follow, Chief Strategy Officer Patrick Hillman told senators that Binance has stepped up its compliance efforts after notable shortcomings in its early days.
Additionally, according to Reuters, Binance has offered services in high-risk money laundering zones Russia and Ukraine, contrary to its own 2020 risk advice. A recent lawsuit by the U.S. Commodity Futures Trading Commission cited internal messages that people were using the stock market for crime.
