The world''s largest crypto exchange has been accused of producing a grossly incorrect annual report in 2020 by the co-owner of a Binance UK subsidiary, Dimplx. Financial statements for one of Binance''s UK companies do not accurately describe its business, according to Dimplx''s directors, nor do they highlight its assets and liabilities, "including potential tax liabilities and turnover." Dimplx, which was formed as part of a joint venture with Binance in 2018, made the allegation in its own filings this month
In Dimplex''s annual report for February 2021, company directors Simon Dingle and Joshin Raghubar allege several flaws in Binance Digital''s 2020 financial statements. According to Binance''s statement, the company ended the year 2020 with roughly 100 million (approximate Rs. 919 crore) in "cash and bank balances," and the same amount was owed to "creditors."
The directors of Dimplex said they believed that the 100 million (approximate Rs. 919 crore) reflected balances kept "for Binance Digital customers who had visited binance.com" and would be "liable to pay transaction fees." However, the financial statements indicated that client transactions had "zero turnover or fees."
Dimplx, a UK shareholder of Binance Digital, claims that information misinformation was deliberate and further called into question financial statements for the period ending on April 14, 2022. As such, the shareholder has difficulties in "determining the present fair value of Dimplx Limited''s shareholding in Binance Digital."
Binance has responded to the accusations, telling CoinDesk customers that it was inunable to respond to the allegations properly and that it understands that the minority shareholders are dissatisfied with the fact that the joint venture did not produce.
The latest claim raises questions about the role played by Binance''s international operations in the period preceding its warning from the Financial Conduct Authority (FCA) UK''s financial regulatory body.
In June 2021, the FCA issued a consumer warning against Binance Markets, a UK subsidiary of the Binance group, which prohibited Binance from participating in any regulated activities in the United Kingdom. Binance had failed to provide basic information about its operations, including trading names and functions for all group entities worldwide.
In February 2022, the FCA expressed concern about the exchange''s contract with Paysafe, expressing concern. A month later, it expressed concern about a collaboration between Binance''s subsidiary Bifinity and EQONEX.