On 14 June 2019 it was there in black and white: Americans were no longer allowed to trade on Binance. Nine days later the leadership sat in a meeting discussing how to keep the biggest American customers anyway. The solution was not a technical trick. It was a phone script.
Seventy percent
First the reason. Why would an exchange that has just publicly said goodbye to a market quietly hold on to that same market?
Because these were not ordinary customers.
Binance classified its biggest traders as VIPs, ranked monthly on the basis of their trading volume. On a recorded leadership meeting of 9 June 2019 one of the co-founders reported that Binance had more than 3,500 VIPs from the United States. And that VIPs and corporate customers together accounted for more than seventy percent of the revenue.
Two weeks later he got more precise: roughly eleven thousand VIPs worldwide were that seventy percent. Americans made up about a third of them.
Roughly speaking: three thousand people brought in more than the tens of millions of other customers combined. And as of 14 June those three thousand were no longer allowed to be there.
The instruction
At the weekly meeting of 9 June 2019 Zhao set the direction. Not in veiled terms.
Four days later — four — a member of the VIP team reported to Zhao and the rest of the leadership: “We have approached 16 top US customers so far, some already have an offshore entity, they said they understand and they are happy that we are getting ahead of this.”
A few days after that the marketing director reported the state of play: the team had spoken to the top 22 American VIP customers. Of those, 19 had already agreed to “change their KYC, or their IP”.
Nineteen out of twenty-two. In less than two weeks.
We don't want to lose all the VIPs which actually contribute to quite a large number of volume. So ideally we would help them facilitate registering companies or moving the trading volume offshore in some way — in a way that we can accept without them being labeled completely U.S. to us.Changpeng Zhao, leadership meeting of 9 June 2019. From the SEC complaint.
No trace
On 25 June the leadership met about it again. This time it was about execution.
Two co-founders explained to Zhao how they were going about it. The American VIPs were approached offline: direct phone calls, so that “no trace” was left behind. If a VIP already had a foreign company, the VIP team helped him open a separate account and move the VIP benefits across.
In the court records there is a line tacked on at the end that puts the whole thing in perspective: Binance’s VIP manager acknowledged that some of those foreign companies were owned by Americans.
A script came too. VIPs would be told they had been “incorrectly identified” as American customers. Zhao steered that wording himself.
And in that same meeting he said something that would not fit in any presentation. About the message that was going to go out:
The message needs to be finessed very carefully because whatever we send will be public. We cannot be held accountable for it.Changpeng Zhao, 24 June 2019.
The document with the hint
On 26 June 2019 Binance’s chief compliance officer put it all down in an internal document. The metadata gives away the date. The title was simple: VIP handling.
It contained ready-made messages, to be sent in batches “as recommended by CZ”, plus scripts for the follow-up calls or for approaching customers through an encrypted messaging service.
For VIPs with American identity documents: make sure the customer completes his new account “where no U.S. documents are allowed”. And: “make sure you tell the user to keep it confidential”.
For the staff themselves there was an instruction attached that shows exactly where the line was being sought: “We cannot in any way tell users we are changing their KYC, that is not compliant. We are in fact rather correcting inaccurate data in light of new evidence.”
And for VIPs who were blocked on their IP address came the passage the whole chapter turns on.
If the user doesn’t get the hint
Tell the user that the reason he cannot use binance.com is that his IP is being detected as a US IP. And then, word for word:
After which the same document added a disclaimer. Do not explicitly instruct users to use a different IP. “We cannot teach users how to circumvent controls.”
And then the sting in the tail: “If they figure it out themselves, that is fine.”
That is the whole construction in two sentences. Don’t say what they should do. Do say just enough for them to work it out themselves. And note down that you didn’t say it.
If the user doesn't get the hint, indicate that IP is the sole reason why he/she can't use .com.From the internal document “VIP handling”, 26 June 2019. The emphasis on “sole” is in the original.
There is always a way for whales
It did not stop in 2019. A year and a half later it was still running.
On 15 July 2020 a member of the VIP team asked how a very large American customer could be taken on. The chief compliance officer’s answer: have them sign up at the American exchange, “but we let them trade on .com through a special arrangement”.
If the volume was really very large, he wrote, “then we push hard on the .com side to accept it as an exception”. And then the sentence that sums up the business model: “we always have a way for whales — either we do it, or a competitor does”.
He added: “CZ will definitely agree with this lol … senior management briefed me to always find a way to support the business.”
What it led to: an internal presentation from March 2020 — nine months after the announcement — reported that the main exchange still had roughly 159 American VIP customers, together good for almost seventy percent of all VIP trading volume worldwide. In May 2021, two years after the announcement, it was still well over 63 percent.
The sentence
On 2 December 2020 someone asked the chief compliance officer whether blocking American customers was still a hard requirement. The answer sits as a screenshot in the SEC complaint, timestamps and all.
Yes, he answered, it still is. Because if American users come onto .com, we fall under the American regulators: FinCEN, OFAC and the SEC.
“But as best as we can.”
“We try to ask our American users to use a VPN.”
And then the sentence that best sums up what four years of court records contain.
On the surface we cannot be seen to have US users but in reality, we should get them through other creative means.Binance’s chief compliance officer, 2 December 2020. Screenshot in the SEC complaint.
What he already knew two years earlier
That same man had written it down as early as December 2018, to a colleague in the compliance department. It is the most quoted little line in the entire file, and the SEC opened its brief with it: “we are operating as a fking unlicensed securities exchange in the USA bro.”
The SEC added three words: “He was right.”
In the SEC complaint and in the prosecutors’ indictment this man is called only “the chief compliance officer” or “Individual 1”. In another official case he does appear by name named elsewhere: the American derivatives regulator CFTC charged Samuel Lim personally as “Binance’s CCO from 2018 through 2022”. He settled in December 2023 for one and a half million dollars plus permanent bans.
Who the other anonymous figures are is in part three.
What the bottom line said
By August 2021 Binance had well over 62 million customers worldwide. Only 25 million of them had ever handed in identity documents. Until at least August 2021 you had to supply nothing at all as long as you stayed under two bitcoin a day — and you could open as many accounts as you had email addresses.
In the same period $898,618,825 in transactions between American users and users in Iran ran across the platform. 106 million dollars came in directly from the Russian darknet market Hydra.
And in all those years Binance filed not a single suspicious activity report with the American financial intelligence unit FinCEN. Not one.
In part three: the American company that was supposed to absorb the blows, the market maker that belonged to the owner, and the bill.
Sources
For this part above all: the SEC complaint of 5 June 2023 (¶¶104-140 on the VIP strategy, ¶111 the compliance quote, ¶135 the screenshot) and the indictment by American prosecutors of 14 November 2023 (case CR23-178, Seattle — ¶¶36-47 on the VIPs, ¶50 on the zero reports). The CFTC case against Samuel Lim and his settlement of December 2023. Quotations are taken from the court documents. The SEC case is a civil complaint; the criminal guilty plea of November 2023 is settled fact. Current as of 1 August 2026.