Shaurya Malwa · 10 hours ago · 2 min read · Insights via ConsenSys
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Binance CEO to sue The Block over alleged fake Shanghai police raid story
On Nov. 21, crypto industry publication The Block released a story entitled “Binance’s Shanghai office shut down following police raid, sources say.” The article quickly blew up on Twitter, with some going as far as to suggest that it contributed to the recent collapse of the Bitcoin price, which now sits at $7,250 as of the time of writing this.
Though, Binance is pushing back. The company’s C-level executives, press relations team, and supporters assert that the story is “pure FUD,” which, for those unaware, stands for fear, uncertainty, doubt. In fact, Changpeng Zhao, the chief executive of Binance, has recently said that Binance will be suing The Block. For what, though, isn’t clear.
First pay-walled under The Block’s “Daily” subscription, the now-controversial article claimed that “several sources close to the matter” said that Binance’s Shanghai location, “abruptly closed its doors in recent weeks.” The version of the article with the updated headline—which was released to the public, not pay-walled—didn’t cite a reason, though the original iteration’s headline insinuated that a “police raid” contributed to the shutdown of the office.
As aforementioned, the piece was subject to an immediate backlash from individuals like Wei Zhou, the CFO of Binance, and community members. Zhou claimed that there was no raid as there is no Binance Shanghai location; other executives of the firm quickly followed suit, writing that a raid couldn’t have taken place on a firm that has decentralized operations.
— Wei (@weizhouBinance) November 21, 2019
Zhao also mentioned that it is a known fact that within the Chinese cryptocurrency scene, individuals, especially in the media, are bribed by companies to FUD competitors in order to gain an edge.
— CZ Binance (@cz_binance) November 22, 2019
Due to these rebuttals, The Block quickly came under fire from those that support Binance, which spans the entire crypto food chain—from retail traders to executives of industry funds and other media publications.
Frank Chaparro, Director of News at The Block, has since released an extensive clarification article, aiming to stabilize this situation. In it, Chaparro asserted that his team stands by a majority of the article, citing reports from Caijing.com that indicated the existence of at least two Shanghai offices of Binance’s. It was added that The Block’s oft-mentioned Binance source, who works closely with the exchange, vouched for the Caijing report, saying that the office housed executives, including Zhao, alongside 200 staff at times.
On the matter of the existence of a “police raid,” Chaparro said that its sources, which include an anonymous Binance employee who was acting as an eyewitness, claimed that “officials had visited one of the offices prior to the shutdown.” Though, it was admitted that the use of the word “raid,” especially in the headline, was too ambiguous to stay online.
Binance CEO announces intentions to sue
While The Block has taken steps to rectify the situation, Binance isn’t satisfied. CZ announced late Friday night (PST) that “we”—seemingly implying Binance as an entity—will be “suing them.”
We will be suing them.
— CZ Binance (@cz_binance) November 23, 2019
It isn’t clear what Binance will be suing The Block for, though the most likely answer is defamation and libel.
Several hours later, CZ double-downed on his intention to sue The Block in a response to former TechCrunch founder Michael Arrington, tweeting, “Make it expensive for them to FUD.”
Make it expensive for them to FUD.
— CZ Binance (@cz_binance) November 23, 2019
CZ followed up that he gave The Block a chance to apologize by stating:
“Already gave them a chance to apologize, but they haven’t. You don’t FUD about a fake “police raid” then just change title.”
“They don’t have the heart to own up to a mistake. Instead, they try to shift focus and change topic.”
One thing is for certain: Chinese authorities are in the midst of a crypto crackdown
While the (former) existence of the Shanghai office remains up in the air—as does the validity of The Block’s original article on the matter—local authorities have formally announced a concerted crackdown on virtual currency operations over recent weeks.
Case in point, on Nov. 22, the Shanghai branch of the People’s Bank of China (PBoC) said in a press release that it remains concerned over cryptocurrency-related speculation through ICOs, IEOs, STOs, and other capital-raising/token distribution methods.
It continued by stating that to counteract the “essentially unauthorized illegal public financing” and issuance of securities, it will be closely monitoring ” the virtual currency business activities within the jurisdiction,” which will be “disposed of immediately” if discovered.
This would suggest that if an exchange was found to be operating a platform that perpetuates cryptocurrency-related speculation in Shanghai, they would be subject to scrutiny from authorities.
That’s not to mention that over the past few weeks, Dovey Wan, a cryptocurrency venture capital investor, has reported that individuals of the Chinese crypto community have been arrested, including a former Bitmain engineer and the operators of a Beijing-based digital asset exchange.