The UK Financial Conduct Authority (FCA) says it is aware of recent statements made by Eqonex Limited and the Binance Group confirming that an entity called Bifinity will advance a US$36 million convertible loan to EQONEX.
Through this loan, Bifinity has acquired some specific contractual rights over Eqonex Limited. Bifinity is the new legal name of an entity formerly called Binance UAB, which is part of the wider Binance Group.
Eqonex Limited is the parent company of Digivault Limited, one of the cryptoasset businesses registered by the FCA under the Money Laundering Regulations (MLRs). As a result of the transaction, individuals and entities that are part of the Binance Group may have become beneficial owners of Digivault for the purposes of the MLRs.
The FCA did not have powers to assess the fitness and propriety of the new beneficial owners or the change in control before the transaction was completed. The FCA has, however, previously published information about its concerns about Binance.
The Binance Group includes Binance Markets Limited. Binance Markets Limited is regulated by the FCA for a limited set of activities. No other entity in the Binance Group holds any form of UK authorisation, registration or licence to conduct regulated activity in the UK.
Due to requirements imposed by the FCA, Binance Markets Limited is not currently permitted to undertake any regulated activities without the written consent of the FCA. This requirement was put in place because, in the FCA’s view, Binance Markets is not capable of being effectively supervised. This is particularly concerning in the context of Binance Markets’ membership of the global Binance group, which offers complex and high-risk financial products posing a significant risk to consumers.
The regulator can take steps to suspend or cancel the registration of a cryptoasset business if it is not satisfied the firm or its beneficial owner is fit and proper.
The watchdog also has powers to suspend or cancel a firm’s cryptoasset registration on a number of grounds, including where a firm has not complied with obligations under the Money Laundering Regulations.
Until outstanding issues are addressed, the FCA’s concerns about Binance Markets Limited remain, including those highlighted in the supervisory notice of June 2021.