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Binance’s New Strategy is to be Less Binance

Published October 25, 2023 10:09 AM
James Morales
Published October 25, 2023 10:09 AM
Key Takeaways
  • New info suggesting that Binance is behind the Hong Kong crypto exchange HKVAEX has come to light.
  • Although HKVAEX isn’t technically part of the Binance group, the two companies appear to be closer than first thought.
  • With Binance facing regulatory headwinds around the world, couldn’t be transitioning to a more behind-the-scenes role?

Around the world, regulatory headwinds have forced Binance to retreat from some markets, while it is hanging on for dear life in others. Over the years, one tactic the group has used to appease regulators is spinning off individual units like Binance US, but the strategy has only had limited success.

Now, new information has come to light suggesting that Binance is behind the Hong Kong Virtual Asset Exchange (HKVAEX) exchange. But if you didn’t know better, you’d think the platform was a fully independent entity. Could Binance’s relationship with HKVAEX imply the dawn of a new era for the global firm, in which it steps away from the limelight in favor of a backstage role?

Binance–HKVAEX Links Exposed

Founded in December 2022, on the surface, HKVAEX is a fully independent Hong Kong-based crypto exchange, that has sought to become one of the first platforms to receive the territory’s coveted crypto license.

However, a recent exposé  by the South China Morning Post has revealed the new exchange’s deep ties to Binance.

In fact, according to unnamed insiders with knowledge of the matter, Binance specifically set up HKVAEX to pursue a crypto license in Hong Kong, where the latter has shown no indication that it intends to apply for one on its own.

Previously, HKVAEX promotional materials have described Binance as a “partner,” and representatives of the two companies have appeared together  in public.

Behind the scenes, the Binance.com and  HKVAEX.hk websites share portions of code and both use Binance’s content delivery domain bnbstatic.com.

Binance HKVAEX terms
Sections of Binance and HKVAEX’s terms of use are nearly identical.

What’s more, the two companies’ terms of use share language, suggesting a degree of coordination between Binance and HKVAEX’s legal departments.

Does Binance Secretly Own Other Exchanges?

According to the Hong Kong Companies Registry, BX Services, the firm that operates HKVAEX, was incorporated in December 2022 as a private limited company with one undisclosed shareholder. And if Chinese media reports are correct, that means that Binance entirely owns the company.

BX Services
  Hong Kong Companies Registry Page for BX Services

But HKVAEX isn’t the only crypto exchange that conceal their ownership in secrecy.

When Binance exited the Russian market in September, it offloaded the entirety of its business in the country to a newly founded exchange, CommEX. Yet before it picked up Binance’s former Russian customers, no one had heard of CommEX. And like HKVAEX, the exchange’s true ownership remains hidden from sight, with the company’s website simply stating that it is “backed by top-tier crypto VC.”

Since its inception in 2017, Binance has always eluded attempts to pin it down and the global web of corporate entities that make up the Binance group today can prove nearly impossible to untangle. 

In the end, without the disclosure requirements of a public company, the ownership structure of Binance and other exchanges it may have a stake in might never become fully transparent.

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