(Nov 29): Binance Holdings Ltd’s attempt to turn the page on costly regulatory violations faces a test in Thailand, where the world’s largest crypto exchange will soon start a new trading venue with one of Asia’s richest men.

The venture with Sarath Ratanavadi’s Gulf Energy Development Pcl recently received the required licenses, but Binance’s guilty plea last week and US$4.3 billion (RM20 billion) in penalties for US anti-money laundering and sanctions contraventions have cast a shadow over the planned domestic digital-asset platform.

Regulator-turned-crypto executive Richard Teng took over as Binance’s chief executive after founder Changpeng ‘CZ’ Zhao stepped down from the role under the sweeping plea deal that resolved the US criminal probe. Teng has flagged Binance’s compliance overhaul and his plan for greater corporate transparency.

In an interview at his Stonehill Golf Club on the outskirts of Bangkok, 58-year-old billionaire Sarath said Binance wasn’t accused of crimes such as fraud or the misuse of customer money in the US settlement, and that he has high confidence in the crypto company’s product offering, systems and security.

“Binance grew extremely fast and so probably crossed paths with some regulations,” he said. “We have much more confidence in its credibility after this storm, which should make it a lot stronger.”

Sarath said he picked Binance given its market-leading position. Thailand’s Securities & Exchange Commission is “very strict” and asked lots of questions, including about Binance, before granting approvals, he added.

The Gulf Binance Co platform is expected to launch in January. Previous filings showed Gulf Energy owns a 51% stake, while Binance holds the remainder. Binance didn’t immediately reply to a request for comment about the venture.

Reduced demand

Among the obstacles for the initiative is a drop in crypto demand following last year’s digital-asset rout and bankruptcies such as the FTX debacle. Binance’s dominance in global crypto trading has also been waning this year.

Official figures show that overall monthly trading volume at licensed digital-asset operators in Thailand slid to a low of 17 billion baht in September from a record of more than 250 billion baht in November 2021, during the great pandemic-era Bitcoin bubble. The number of active trading accounts has tumbled about 87% from a peak of some 700,000 in 2021.

Even so, some Thai businesses are backing a revival for crypto, which this year has partially rebounded from the 2022 selloff. For instance, Kasikornbank Pcl, one of the nation’s largest lenders, acquired a licensed crypto exchange operator last month.

Sarath — whose net worth is estimated at US$11 billion in the Bloomberg Billionaires Index — said tighter regulatory oversight will help restore investor confidence. Gulf Binance’s technology partner, wireless operator Advanced Info Service Pcl, has retail outlets that will bolster the joint venture’s marketing push, he added.

“Crypto grew at a pace that was hard for regulations to keep up with,” Sarath said. “Officials have since tightened rules and corrected business practices, and all market participants have to follow the new regulations.”