UK FCA concerned as Binance gains rights over EQONEX

Rick Steves

The FCA added that it can suspend or cancel the registration of a cryptoasset business if it is not satisfied the firm or its beneficial owner is fit and proper, but other grounds may apply, such as failure to comply with obligations under the Money Laundering Regulations.

The UK Financial Conduct Authority has commented on recent statements made by Eqonex Limited and the Binance Group about Bifinity, which will lend US$36 million in a convertible note to EQONEX in exchange for 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, which is registered with the FCA under the Money Laundering Regulations (MLRs).

The transaction may have turned Binance individuals and entities into beneficial owners of Digivault for the purposes of the MLRs, said the regulator.

FCA points finger at Binance Markets Limited

While the FCA did not have powers to assess the fitness and propriety of the new beneficial owners or the change in control, the financial watchdog has previously warned about the Binance Group, which includes Binance Markets Limited, an entity regulated by the FCA for a limited set of activities.

“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”, the agency said.

“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 FCA added that it can suspend or cancel the registration of a cryptoasset business if it is not satisfied the firm or its beneficial owner is fit and proper, but other grounds may apply, such as failure to comply 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”, the regulator stressed.

It was in June 2021 that the FCA announced Binance Markets Limited is not permitted to undertake any regulated activity in the United Kingdom.

In December 2021, EQONEX announced it was engaged in a broad review of the strategic direction of the digital assets financial services company operating a crypto exchange and an over-the-counter trading platform.

As part of that, the board has determined that chief executive Richard Byworth will step down with immediate effect and be replaced by COO Andrew Eldon as the interim CEO. The company added it was evaluating merger or takeover options with third parties.

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