The Justice Sector Professionals Submit Letter to DAA, Discussing the Practical Situation of Binance’s Cooperation with the Taiwan Ministry of Justice, and Providing Analysis and Supplement to Legislator Wang Hongwei’s Questioning of Binance.
Background:
Binance’s global user base surpasses 200 million! Richard Teng: Strong Growth and Maturity Sign of the Crypto Industry.
Why this Letter?
During yesterday’s (June 12th) interpellation in the Legislative Yuan, Legislator Wang Hongwei raised questions regarding the cooperation between the Ministry of Justice and the world’s largest cryptocurrency exchange Binance. She criticized Binance for its notorious reputation in the global market, calling it an “internationally known money laundering criminal group” and demanded that the Ministry of Justice cease cooperation with Binance.
In response, Binance emphasized that it has never been fined for fraud or scams and has been actively cooperating with global law enforcement agencies for a long time. In the crypto community, many people have voiced their support for Binance, acknowledging the importance of government agencies overseeing cooperation partners but also urging elected representatives to deepen their understanding of relevant information before making judgments.
Today (June 13th) marks the official establishment of the domestic VASP Association, and DAA has received an anonymous letter from law enforcement officials, hoping to reflect the actual work and cooperation with the crypto industry, for the sake of the public.
Letter Text:
Regarding the legislator’s questioning, there are several points that must be clarified and explained:
First, the focus that Legislator Wang is concerned about is the potential pain points that our law enforcement agencies may face when requesting data and cooperation from overseas VASP operators.
In today’s global anti-money laundering trend, cooperation between the public and private sectors is indispensable. The advantage lies in the fact that the private sector’s resources and business expertise are usually higher than those of the public sector, making it more efficient, especially in cases of executing international judicial assistance. Traditionally, obtaining information from foreign companies usually requires confirming the nationality of the company, clarifying whether there is a judicial assistance treaty with our country, or conducting judicial assistance based on the principle of reciprocity. This process can be time-consuming and may not always yield satisfactory results. Given this, Taiwan’s law enforcement agencies have signed agreements with some well-known foreign companies such as Google, Meta, and LINE, enabling them to request user data under specific conditions. This practice enhances the efficiency of case investigations and is deemed necessary.
Turning to cases related to virtual currency fraud and money laundering, Binance Exchange (referred to as Binance below) is currently the world’s largest centralized exchange by market value and number of users. It regularly holds user data and relevant transaction information, such as internal KYC data, within its domain. Therefore, if a case involves illegal activities of Binance users or illegal money flowing into Binance, as mentioned by the Minister of Justice, law enforcement agencies will request data from Binance based on investigative needs to retrieve relevant information or conduct seizures. These actions are normal investigative measures and are deemed necessary.
Therefore, in the investigation of cases, law enforcement agencies, based on the judgment of individual cases, may reasonably request assistance from Binance if there is an urgent need for data retrieval or time constraints. Based on past experiences, Binance not only provides a platform for law enforcement agencies worldwide to submit case requests but also provides data, assistance in freezing and seizing virtual currencies according to law enforcement requests. In this regard, the services provided by Binance have a positive impact on law enforcement investigations.
Although these platform services are unique to Binance, other virtual currency exchanges also provide contact channels (usually email addresses) and similar user and transaction data to assist law enforcement agencies for subsequent investigations. This highlights the importance of cooperation between the public and private sectors in such cases.
Indeed, due to its reputation and scale, Binance has significant influence on virtual currency transactions and development. The company’s policies are of great significance to society, and it is indeed worth noting whether Binance is involved in any illegal activities. Therefore, Legislator Wang’s concerns are not unfounded. However, since cooperation between the public and private sectors is a trend, law enforcement agencies should not completely cut off communication or assistance opportunities with Binance. In the absence of case-specific information, general business interactions and cooperation with company departments have a positive demonstration effect. In contrast, despite Binance’s organization of several workshops around the world, the content is mostly the same, focusing only on basic knowledge of virtual currency (similar to learning the alphabet) and the process of data retrieval. For law enforcement personnel with knowledge and experience in investigating related cases, the help provided is limited.
Not to mention that Binance’s external publicity has mentioned in a certain case that they “held online cross-border meetings with the investigating bureau personnel and prosecutors handling the case, discussing investigative methods, and the experienced Binance financial crime compliance team provided advice based on relevant currency flow analysis.” This practice not only easily leads people to believe that Binance has investigative powers similar to our law enforcement officers (how else would they know the details of the case and hold meetings?), but also puts law enforcement officers in a dilemma of “whether they have disclosed case details to parties other than the investigative agencies” (engaging in online cross-border meetings with Binance, discussing case details, and discussing investigative methods). In this regard, Legislator Wang’s concerns during the questioning are justified.
Binance’s efforts and attitude in Taiwan are commendable. Due to its status as a foreign company, and the events raised by legislators are not fictional, it cannot be ruled out that Binance may face fines or even criminal prosecution for violating the regulatory frameworks of other countries in the future. However, in weighing the pros and cons of prosecuting crimes, cooperation with Taiwan’s public sector contributes to building a positive corporate image. If Binance wishes to continue establishing business relations with Taiwan’s public sector, it should ensure the compliance of its operations and consider the appropriateness of its external communications to avoid being misunderstood as purely commercial or overly promotional, regarding the related education and training conducted by Binance, and even the establishment of a dedicated data retrieval platform API interface. If Binance can further provide operational support to Taiwan law enforcement agencies and ensure the sensitivity and accuracy of information, it will undoubtedly enhance mutual trust and cooperation and reduce external doubts.
Such practices are not only beneficial to Binance but should be extended to other foreign VASP operators who wish to establish a presence in Taiwan in the future. Regulatory authorities should set clear supervisory and normative guidelines with the same standards to facilitate the establishment of positive business relations between operators and the public sector in terms of law enforcement and other aspects (such as consumer protection).
Finally, the Virtual Currency Industry Association has been established today, with directors and supervisors elected. Domestic VASP operators have always cooperated with law enforcement agencies in combating fraud and have provided education and training. It is hoped that after the Financial Supervisory Commission establishes special laws, effective supervision, consumer protection, and encouragement of diversified innovation and development in the industry can be achieved.
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