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At least 372 Americans are trading cryptocurrencies on foreign exchanges, skirting a ban on such trades, while those exchanges dodge U.S. regulations meant to protect speculators against market manipulation and safeguard against money-laundering, according to a study by data firm Inca Digital that The Wall Street Journal reported.
To reach its conclusion, Inca sifted through Twitter accounts.
The firm found tweets boasting of successful trades, sometimes including images of statements as proof.
Other Twitter users circulated contact information for various offshore exchanges to earn referral rewards if their followers opened accounts on those exchanges.
The referral data allowed Inca to verify user accounts on Binance, Bitfinex, BitMEX, Bybit, FTX, Huobi, and OKEx.
The study netted more than 2,000 users of the exchanges, including 372 Americans. Of those 372, 240 were using Hong Kong-based FTX, which recently raised $290 million from backers including Softbank and Sequoia Capital.
Most of the traders do not actually buy cryptocoins.
Instead, they invest in derivatives, basically placing bets on whether the price of a particular cryptocurrency will rise or fall.
Since the study was released, Binance, Bitfinex, Bybit, FTX, and OKEx have said they have taken steps to block traders in the U.S.
Huobi has not commented.
Meanwhile, Malaysian officials announced an “enforcement action” against Binance and three of its affiliates and also censured the exchange’s CEO.
The country has ordered Binance to disable its website and mobile app and otherwise cease operations, including marketing, in Malaysia.
Malaysian regulators called Binance’s operations there “illegal” and advised traders to cease dealing with it.
Britain, Hong Kong, Italy, and Japan also are tightening their grips on Binance as hedge funds are ending their dealings with the exchange. (See “MORE TROUBLES FOR BINANCE,” Trends Journal, 20 July 2021.)
Malaysian watchdogs issued a personal “public reprimand” to Changpeng Zhao, the crypto mogul who is Binance’s CEO and announced they would hold Zhao personally responsible for carrying out the shutdown order.
Binance is aggressively strengthening its compliance efforts, has placed compliance officers in senior positions in the company, and is ceasing derivatives trading in Europe, Zhao said in a statement cited by the WSJ.