Author: Syedur Rahman 10 October 2023
Syed Rahman outlines the action the FCA has taken against lending platform Rebuildingsociety.
The UK’s financial regulator has restricted the activities of crypto exchange Binance’s partner.
Binance partnered with peer-to-peer lending platform Rebuildingsociety to comply with the Financial Conduct Authority’s (FCA’s) marketing regime.
But the FCA has placed restrictions on Rebuildingsociety. In a notice, the FCA said that Rebuildingsociety was not authorised to “approve the content of any financial promotion for a qualifying cryptoasset for communication by an unauthorised person” and needed to withdraw any existing approvals.
The notice suggested that Binance may no longer have a UK partner, which is necessary to comply with the FCA’s crypto marketing requirements that came into effect on October 8.
The FCA has warned Rebuildingsociety that it must notify clients that it is “not permitted to approve the content of any financial promotion for a qualifying cryptoasset” and must withdraw any adverts offering to approve financial promotions. It also has to confirm its compliance to the FCA in writing.
This action by the FCA will be a blow to Binance. Binance had intended to use Rebuildingsociety to allow its UK users to view its products and services through a localised domain, as the exchange is not registered with the FCA.
The FCA’s restrictions came less than seven days after Binance had announced its partnership with Rebuildingsociety. Under the FCA’s regime, Binance had said it would no longer offer referral bonuses and gift cards. The regime was introduced in order to ensure that firms, including crypto companies, provided “clear, fair and not misleading” adverts. A failure to do this could lead to criminal charges.
This activity comes on top of Binance using Seychelles-based Net Services Ltd for its crypto-to-crypto payment product, allowing UK customers to spend their cryptocurrency at a small number of retailers and service providers. An air of mystery surrounds this relationship as Net Services seemingly does not appear on the Seychelles government’s corporate register, nor does it appear on the Seychelles Financial Services Authority register.
The FCA has stated that certain companies could receive approval by January 2024 due to some uncertainty surrounding the rules. It is not known whether Binance planned to seek this deadline extension. A number of companies, such as the exchanges OKX and MoonPay, have already said that they intend to comply with the FCA regime.
Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, international arbitration, civil recovery, cryptocurrency and high-stakes commercial disputes.