Binance Employees Detained in UAE, Exchange Says Staff Were Cleared and Released

In the past few weeks, two individuals working for the cryptocurrency exchange Binance were arrested in the United Arab Emirates (UAE), reports The New York Times. It was also stated that the arrests were made during an ongoing investigation into financial misconduct linked to the Binance exchange. It was reported that a mid-level employee was arrested in Sharjah and kept overnight in the police station. Additionally, another official from the Dubai-based unit of Binance was interrogated in a police station in July.

Binance Says Inquiry Focused on Third-Party Funding Flows

Binance spokesperson told The New York Times in their report that only "a small number of employees" were approached by UAE authorities and required to give their usual statement about third-party funding flows. The company noted that its employees were not being targeted by any of these investigations, and all the people who gave statements were "promptly cleared and released." This was an investigation of third-party cash flow going through a Binance client cash account. The employees in question were not the subjects of this investigation.  

Most client money accounts distinguish between funds of the customer and working capital of the business. Such accounts may include banks, payment service providers, companies, as well as various intermediaries. The involvement of third-party payments is not proof of any illegal actions. Exchange stated that it was cooperating with Dubai Police as well as other Emirates authorities. It further stated that it was trying to develop clear procedures for handling such queries in the future.

Binance claimed that there are authorities who are unfamiliar with cryptocurrency transactions and financial dealings with institutional clients. It called its talks with UAE officials an attempt to develop “clear, appropriate coordination procedures.” However, the reports did not specify which client accounts, third parties, and transaction amounts were involved in the transaction. It did not mention for how many days the employees were detained or whether there were any travel restrictions placed on them.

This investigation has not led to any announcement regarding the change of Binance's regulatory position in Dubai. The Virtual Assets Regulatory Authority maintains Binance FZE as an active licensed service provider in its registry. The license includes transactions, brokerage-dealing, borrowing, lending, management, and investment activities. It also allows the firm to cater to retail, qualified, and institutional investors. There are also special conditions for derivatives trading and margin operations.