Beautiful Virgin Islands

Wednesday, Aug 26, 2026

Leaked Document Reveals Binance’s Elaborate Scheme To Evade Regulators

Leaked Document Reveals Binance’s Elaborate Scheme To Evade Regulators

Binance Holdings Limited, the world’s largest cryptocurrency exchange, conceived of an elaborate corporate structure designed to intentionally deceive regulators and surreptitiously profit from crypto investors in the United States, according to a document thought to be created by its senior executives and obtained by Forbes.

Cayman Islands-based Binance is currently responsible for about $10 billion in total crypto trades per day and its founder and CEO Changpeng “CZ” Zhao is one of the few known cryptocurrency billionaires.

The 2018 document details plans for a yet-unnamed U.S. company dubbed the “Tai Chi entity,” in an allusion to the Chinese martial art whose approach is built around the principle of “yield and overcome,” or using an opponent’s own weight against him.

While Binance appears to have gone out of its way to submit to U.S. regulations by establishing a compliant subsidary, Binance.US, an ulterior motive is now apparent. Unlike its creator Binance, Binance.US, which is open to American investors, does not allow highly leveraged crypto-derivatives trading, which is regulated in the U.S.

The leaked Tai Chi document, a slideshow believed to have been seen by senior Binance executives, is a strategic plan to execute a bait and switch. While the then-unnamed entity set up operations in the United States to distract regulators with feigned interest in compliance, measures would be put in place to move revenue in the form of licensing fees and more to the parent company, Binance.

All the while, potential customers would be taught how to evade geographic restrictions while technological work-arounds were put in place.

Forbes reached out to Binance founder CZ as well as its chief compliance officer Samuel Lim about the leaked document and didn’t receive a response to our questions. Binance.US CEO Catherine Coley and Harry Zhou, the person identified as creating the document, also didn’t comment. [After the article was published CZ responded with several tweets claiming that the story was incorrect and that the document was not created by a current or former employee. He further wrote that “Binance has always operated within the boundaries of the law.” Ed note: Chief compliance officer Lim had previously sent an email to Forbes confirming that Zhou had been a Binance employee.]

The source of the document, whose identity we’ve agreed not to reveal, says it was first presented to CZ in Q4 2018 by Binance mergers and acquisitions manager Jared Gross, an attorney who Forbes believes is actually the exchange’s general counsel.

The source says the document was created by former Binance employee Harry Zhou, a serial entrepreneur, who is the co-founder of Koi Trading, a San Francisco-based cryptocurrency exchange partially owned by Binance. The file is named “Presentation 2” so there may have been other strategies being considered. Still, an analysis of the document reveals that many of the specifics outlined within it, are already in place.

“U.S. Enforcement Mitigation”


The strategy document has four main components, Goals, Proposed Corporate Structure, Regulator Engagement Plans and Long Term License Plans. The first goal, enforcement mitigation, is designed to minimize the impact of U.S. regulation. It explicitly mentions the need to undermine the ability of “anti-money laundering and U.S. sanctions enforcement” to detect illicit activity.

More specifically, it describes a detailed strategy for distracting the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC), the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the New York Department of Financial Services (NYDFS).

To do this, the document advocates for participating in the U.S. Department of Homeland Security (DHS) Cornerstone Program for detecting weaknesses in the financial systems. A representative of the Department tells Forbes that Binance.US did participate in the Cornerstone program, as a standard part of the process of becoming a Money Service Business, but declined to comment further.

Interestingly, Binance itself is now a client of the DHS-funded CipherTrace, based in Menlo Park, California, one of the first security firms with technology explicitly designed to investigate on-chain transactions of the exchange’s own cryptocurrency. Another CipherTrace client is the U.S. Securities and Exchange Commission, which signed a one-year deal with CipherTrace this July.

While the SEC declined to comment as to whether or not its engagement of CipherTrace was part of a larger investigation into Binance or Binace.US, the contract explicitly states that one of the main reasons for selecting CipherTrace is it is “the only known blockchain forensics and risk intelligence tool that can support the Binance coin (BNB) and all tokens on the Binance network.”

“Insulate Binance from US enforcement”


The proposed corporate structure section starts off with a bold bullet point, “Key Binance Personnel continue to operate from non-U.S. location to avoid enforcement risks.” In the same section the document details how the Tai Chi entity would act as a magnet for regulatory inquiries, and should be willing “to accept nominal fines in exchange for enforcement forbearance.”

Though not readily apparent, the document reveals that the Cayman Islands-based holding company will be connected to an unnamed Delaware C-corporation and the separate Tai Chi entity (see image above), showing how revenue from the U.S. business could be funneled back to Binance, the parent company. “License and service fees paid by the US Service company to Binance are functionally US-sourced trading fees,” the document states.

But unlike an actual subsidiary whose parent company could be held accountable for regulatory violations, the Tai Chi entity would have little more than a contractual relationship, further “insulat [ing] Binance from U.S. enforcement,” according to the document. Essentially, it would be a decoy.

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Turnbull Warns AUKUS Could Leave Australia Without Promised Nuclear Submarines
California Billionaires Pour More Than $150 Million Into Fight Over Proposed Wealth Tax
German Broadcaster Goes Dark to Warn AfD Could End Its Saxony-Anhalt Service
Badenoch Plans Major Shadow Cabinet Reshuffle as Tories Struggle in Third Place
Prime Minister Andy Burnham to Give Ukraine Classified Storm Shadow Blueprints for Domestic Missile Production
UK Graduate Job Vacancies Plunge 45% to Lowest Levels on Record
Iranian Hackers Shut Down British Power Plant for Four Days in Landmark Cyber Attack
Novak Djokovic Reveals Relentless Self-Doubt and Rejects Retirement in New Documentary
Trump Imposes 50% Tariffs on Canadian Goods After Bilateral Trade Talks Collapse
Australia Combines Indigenous Fire Knowledge With Satellite Tech to Combat Catastrophic Wildfires
Father and Son Jailed in Scotland Over £900,000 Airport Cannabis Smuggling Operation
UK Fraud Reports Surge Sevenfold as Criminals Exploit QR Codes in Parking Meters and Phishing Emails
Brighton Thrash Aston Villa in Four-Goal Opening Half as Manchester City Trail Bournemouth
Erin Patterson Appeals Triple Murder Convictions After Hotel Mixed Sequestered Jury With Prosecution
The rise and fall of Hui Ka Yan, China’s richest man
Woke: Britain Considers Plain Packaging for Cigars as Specialist Shops Warn of Industry Collapse
Britain's Public-Service Productivity Remains Below 2019 as £80 Billion Output Gap Fuels WFH Debate
Mandelson Epstein Case in Jeopardy as U.S. Files Stay Out of Reach
Prince Harry and Six Others Ordered to Pay £9.5 Million After High Court Defeat
Petrol Bombs Set Luxury Cars Alight Outside Birmingham Wedding as Police Hunt Three Men
Bitcoin Surges Toward $80,000 as Short Squeeze and ETF Inflows Ignite Crypto Rally
Twenty-Nine US States Take Meta to Trial Over Alleged Child Addiction on Instagram and Facebook
Former Scottish National Party Executive Peter Murrell Jailed for Five Years Over £400,000 Embezzlement
Moderna and Merck's Personalized Cancer Vaccine Succeeds in Historic Late-Stage Melanoma Trial
Prince Harry and Meghan to Move Back to Britain With Their Children
England and Wales Have Fewer Than 1,800 Prison Places Left for Men
Suspected People Smuggler Arrested After Investigation Identified Him
Children's Doctors Warn That Vaping Can Lead Young People to Smoking
Hundreds of Thousands of Students Receive GCSE and Vocational Results Across England, Wales and Northern Ireland
Here Is What Can Never Happen in Your Country: Taiwan Is Giving Money to All Its People Because It Collected Too Much Tax
UK Inflation Rises to 2.9% as Energy Bills Jump
UK Issues New Conduct Guide for Asylum Seekers on Consent and Respect
A Sleepless Night on Wall Street: Nasdaq to Begin Nearly Round-the-Clock Trading
"The First in the World": 69-Year-Old Protested Artificial Intelligence—and Went to Jail
Ukraine's Ousted Defence Minister Calls for Wartime Presidential Election
China’s Lifelike AI Humans Move From Livestreams Into Real-World Service Roles
Sarah Ferguson Reportedly Retreats to Late Ex-Boyfriend's Swiss Chalet
Cristiano Ronaldo and Georgina Rodríguez Sign Prenup Protecting Their Separate Fortunes
Thieves Steal Antonello da Messina Renaissance Masterpieces From Sicilian Museum
Better.com Founder Who Fired 900 Employees on Zoom Is Ousted as CEO
Italian Speed Camera Issues Nearly 32,000 Fines in 10 Weeks, Worth More Than €3 Million
AI Manager at San Francisco Store Recommends Firing Human Employee
Google Launches Pixel 11 With Gemini AI at the Center of Its Hardware Strategy
Reform UK Unveils Plan to Cut Welfare Spending by More Than £50 Billion a Year
Prime Minister Andy Burnham Praised Extinction Rebellion for Doing a 'Great Service'
UK Wildfire Phone Alert Triggers Backlash as Users Switch Off Emergency Warnings
Heathrow Roads Reopen After Burst Water Main Floods Access to Terminals 2 and 3
Former NBA Players Enes Kanter Freedom and Royce White Say They Will Enter 2027 WNBA Draft
Former Cambridge Professor Jason Arday Found Dead Days After Resigning Amid Plagiarism Row
US Appeals Court Rules AI Agent's Website Actions Are Legally Attributed to the User
×