Binance CEO weighs in on the notion of “offshore” crypto businesses

Binance CEO Changpeng Zhao took to Twitter on Feb. 19 to suggest that differentiating between on-shore and off-shore businesses constitutes a false distinction.

Zhao posted his comments in response to Kraken CEO Jesse Powell, writing:

“[Powell] uses the word ‘offshore’ quite often…The term ‘offshore’ appears overly narrow-minded, self-centered, misses the broader picture and [is] unhelpful to the development of our industry.”

Zhao argued that all companies operate on-shore in relation to their own countries. He said that to distinguish in this way is “arrogant” and added that believing in the superiority of companies in one’s own country is not a cure-all for the crypto industry.

He also noted that such thinking has apparently failed to prevent on-shore fraud. Zhao observed that FTX.US failed alongside FTX despite the fact that, relative to the United States, it was an on-shore company with many American executives.

Zhao explicitly denied that this sort of sentiment is only seen in the U.S. He said that it can be seen in Asia as well, as there are Chinese and Japanese words that are used to disparagingly refer to foreign businesses (“lao wai” and “gaijin” respectively).

Zhao’s comments specifically criticized statements made by departing Kraken CEO Jesse Powell on Feb. 17. Powell had lamented that U.S. regulators did not listen to his complaints about off-shore companies and provided excuses for those companies — even as those regulators took action against Kraken’s staking program this month.

Zhao seemed to recognize the severity of Powell’s situation, as he wrote in one tweet: “I apologize for saying [this] so directly. No harm meant.”

Despite Zhao’s sentiments around on- and off-shore business, his company must now navigate international regulations. Binance’s U.S. stablecoin partner, Paxos, announced on Feb. 13 that it would stop issuing Binance USD (BUSD) for regulatory reasons.

Reports from the Wall Street Journal on Feb. 15 additionally suggested that Binance will pay penalties to American regulators to resolve regulatory probes. Zhao added on Feb. 17 that though Binance does not plan to delist U.S.-based cryptocurrencies, the company will likely reduce U.S. investments and bids and will instead “seek permission first.”

Binance.US also faces scrutiny over its connection to trading firm Merit Peak.