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Binance Shanghai office reportedly raided, Binance denies having a Shanghai office

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There are two sides to every story. Here are both of them, so you can choose your preferred reality.

The cryptocurrency markets took a plunge today on the back of reports that Binance, the world's number one exchange by volume, had its Shanghai office raided by police.

All up, the cryptocurrency markets shed about US$5 billion of value.

Fortunately, these allegations have spawned a lively debate, the entertainment value of which has been appraised at about $5 billion, so it all evens out.

Rumours, half-truths and other facts

Binance CEO Changpeng "CZ" Zhao responded to the reports by saying on Twitter that there was no raid, there were no police and Binance never had a Shanghai office.

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This appears to have come as something of a surprise to a lot of people who say they're pretty sure Binance does, or did, have an office in Shanghai because they've been there. It also conflicts with Chinese media reports which refer to the existence of a Binance office in Shanghai.

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It's worth noting that this isn't necessarily an open-and-shut debate. It's an evolving situation, with lots of conflicting information.Picture not described


Choose your own adventure


This happened

The raid on Binance's Shanghai office may have been any number of things. It could have been a precautionary move, a compliance check-up, a matter related to a specific investigation or an individual employee, and so on.

The question, then, is why Binance is denying that an office exists at all? Based on this, one might speculate that the situation more broadly reflects uncertain and rapidly shifting attitudes towards blockchain and cryptocurrency in China, and that there's a lot going on behind the scenes here.

When China doubled down on its commitment to blockchain last month, one of the effects was that Bitcoin started flying, while some China-focused cryptocurrencies saw quick pumps of 100% and more.

This was problematic, as China's attitude to the space is firmly in the "blockchain, not cryptocurrency" side of things. The pumps showed that it's difficult to separate the two, and that orderly progression of the blockchain industry, as mandated by the government, would not be possible without a deliberate effort to rein in the cryptocurrency markets as a whole.

In this case, those efforts took the form of a raid on Binance's office in Shanghai.

This did not happen

There are a lot of reasons why fake news enters the system, and a lot of reasons for it to spread quickly. You can't be the world's number one cryptocurrency exchange by volume without looking over your shoulder.

As CZ said, several rival exchanges and other competitors employ teams with the specific goal of funding and pumping out harmful, but often false, information on Binance in an effort to gain a competitive edge. This is an unfortunate and distasteful, but also quite common, tactic he said.

This is a reflection of two unfortunate trends in journalism. One is a shift towards "clickbait" headlines, which have a tendency to blow situations out of proportion. Remote workers turn into an office, and a police visit becomes a raid.

The other is the tricky question of how financial incentives in journalism pollute the fountain of truth. Trusted media outlets, which are solely reliant on traffic and advertising dollars, can easily become partisan propaganda mouthpieces when that's the only way of keeping the lights on. These factors can then combine with social media to exaggerate and distort facts.

This situation may be an example of how easily bad information can spread.



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Disclosure: The author holds BNB, BTC at the time of writing.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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