Binance CEO Denies Leaked 'Tai Chi' Document Claiming Elaborate Scheme To Evade Regulators

Binance CEO Changpeng 'CZ' Zhao has denied allegations that the cryptocurrency exchange set up its U.S. arm to sidestep regulations.

Forbes, on Thursday, reported that it obtained a leaked "Tai Chi" document outlining the company's plans to circumvent financial regulations in the U.S.

"The statements and accusations in the article are incorrect," Zhao said on Twitter, noting that the Forbes article was based on a third-party document that was not produced by any former or current Binance employee.

"Anyone can produce a 'strategy document' but it does not mean Binance follows them," he added.

The Forbes article claimed that the leaked document showed Binance intended to set up a "Tai Chi entity" in 2018 to protect its operations from the country's regulatory scrutiny. It said the U.S. operation would distract the regulators with "feigned interest in compliance," while measures would be taken to move the revenue moves from the U.S. operation to the parent Binance company in the form of licensing fees.

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

Zhao tweeted that Binance always operated within the boundaries of the law and this was reflected in its many international exchanges such as Binance U.S, Binance Korea and Binance Singapore. "Binance has always approached every location with proper licensing and applications."

Zhao also disputed claims that the exchange is trying to circumvent regulations, citing its partnership anti-money laundering/countering financing of terrorism (AML/CFT) tools and vendors like Ciphertrace and Refinitive.

The alleged author of the Tai Chi document is Harry Zhou, who had a history of launching U.S. versions of Chinese companies, the Forbes report said. In 2018, Zhou worked for Huobi U.S., another cryptocurrency exchange.

The article also said the document is being circulated in law firms and accounting firms associated with Binance. "There is speculation that the FBI and the IRS may be investigating," the publication added.