Binance has made a fresh bid to enter Japan a year after it was warned by regulators about its unauthorised activities, with a deal to buy Japanese crypto company Sakura Exchange BitCoin.
The world’s largest crypto exchange, which is owned by entrepreneur Changpeng Zhao, is to return to the Japanese market by purchasing an entity licensed with the country’s Financial Services Agency. The terms of the transaction were not disclosed.
The deal follows a trail of controversies for Binance in Japan, where regulators have repeatedly warned consumers that the exchange is conducting unauthorised transactions.
Binance’s acquisition of Sakura also comes amid heightened scrutiny of the sector following the rapid collapse of rival exchange FTX, the shockwaves from which are rippling through the industry.
After the high-profile failure of the Tokyo-based Mt Gox crypto exchange in 2014, Japan became one of the first countries to regulate crypto trading. It stipulates that companies operating in the country must be authorised by the FSA to legally trade with its citizens.
Last year, the FSA warned consumers that Binance was conducting unauthorised trades in the country. It was also the second warning from the market watchdog, which reprimanded the crypto exchange in 2018 for the same activity.
Binance declined to comment on whether the FSA had approved the deal. The FSA told the Financial Times that Binance did not require regulatory approval to acquire Sakura, but a spokesperson for the watchdog said it would monitor whether any change in shareholder structure led to changes in internal controls and systems that would impact the company’s legal compliance.
Sakura has a local licence and offers trading of popular coins such as bitcoin and ethereum against the yen. Its purchase provides Binance with its first license in east Asia, the company said.
Takeshi Chino, general manager of Binance Japan, said the Japanese market would play a “key role” in the future of cryptocurrency adoption.
“We will actively work with regulators to develop our combined exchange in a compliant way for local users. We are eager to help Japan take a leading role in crypto,” he said.
The sprawling digital asset firm has subsidiaries around the world and has faced the wrath of other regulators too. It has repeatedly clashed with the UK’s Financial Services Authority, which last year said the Zhao-led trading shop was “not capable of being effectively supervised”, adding that Binance’s products posed a “significant risk” to consumers.
Earlier this year, the Financial Conduct Authority raised concerns about Binance’s agreement with London-based Paysafe, which allowed the exchange to restore links with the UK’s financial services system.
Financial watchdogs in jurisdictions, including Singapore, Hong Kong, Italy and Lithuania, have also cracked down on Binance’s activities. In July, the Dutch central bank fined the exchange more than €3mn for offering services without the proper registration. The bank added that Binance benefited from a “competitive advantage” from not paying levies and skipping compliance costs.
The deal is the latest in a string of acquisitions for Binance, which bought data website CoinMarketCap in 2020 and Visa card issuer Swipe in 2021. Earlier this month, Zhao ditched a deal to buy Sam Bankman-Fried’s now-collapsed FTX exchange, a day after agreeing to the rescue purchase.