The National Agency for Perspective Projects of Uzbekistan, a regulator in the crypto asset sphere, has examined international crypto exchanges, including Binance, for compliance with licensing requirements and state policies, as reported by NAPP.
The following violations of the legislation been identified by NAPP:
- Presence of credible and confirmed facts on providing services to citizens of Uzbekistan without obtaining an appropriate Service Provider license on the territory of the Republic of Uzbekistan;
- Transactions with anonymous crypto-assets, as well as crypto-assets and funds obtained by criminal means (theft, fraud, etc.) are conducted on the Binance’s platform;
- Binance is not a legal entity — resident of the Republic of Uzbekistan;
- Absence of a electronic platform hosted on servers located in Uzbekistan;
- Legal requirements of the Republic of Uzbekistan in crypto-assets turnover sphere, countering the legalization of proceeds from criminal activity, financing of terrorism and financing of the proliferation of weapons of mass destruction are not complied, as well as the one for personal data storing and usage;
- Absence of data regarding the one who is in charge of management and participating in the authorized fund (capital) of Service Providers based on subparagraph “h)” of paragraph 9 of the Regulation, as well as companies registered in offshore zones;
- Absence of a formed (paid up) charter fund (capital) reserved on a separate account in a commercial bank of the Republic of Uzbekistan.
After the inspection, the NAPP prepared an act outlining the violations and sent it to Binance, requesting to rectify the issues. However, the report states that Binance did not take the necessary measures and failed to acquire a license to operate in Uzbekistan.
As a consequence, the agency opted to levy a fine of 300 basic calculation value (equivalent to 102 million soums or approximately $8,300). The decision was conveyed to both the crypto exchange Binance and the regulatory body of the jurisdiction where the company is registered.
The offender has the option to voluntarily pay the fine within a month; otherwise, the authorized body will file an application for the recovery of the fine in court.
The NAPP emphasized that the legislation of Uzbekistan imposes administrative and criminal liability for engaging in activities without a license.
Citizens and legal entities of Uzbekistan can conduct transactions involving the purchase, sale, and exchange of crypto-assets exclusively through national service providers, the NAPP reminded with a reference to the legislation.
In December 2023, Bloomberg reported that the Department of Justice and Internal Revenue Service (IRS) of the U.S. launched an investigation into Binance. The assumption is that more funds related to criminal activity passed through Binance than through any other crypto exchange.
Binance is one of the first and largest cryptocurrency exchanges in terms of trading volume. It was established in 2017 and registered in the Cayman Islands.