Japan's Financial Services Agency plans to issue a warning against Hong Kong-based cryptocurrency exchange Binance for operating in the country without registration, Nikkei business daily first reported.
The financial watchdog plans to work with police to file criminal charges if Binance fails to halt its Japan operations.
Changpeng Zhao, chief executive of Binance, one of the world’s largest cryptocurrency exchanges, tweeted that the company was in talks with the FSA.
“We are in constructive dialogue with Japan FSA, and have not received any mandates,” he tweeted.
“It does not make sense for JFSA to tell a newspaper before telling us, while we have an active dialog going on with them.”
Nikkei showed irresponsible journalism. We are in constructive dialogs with Japan FSA, and have not received any mandates. It does not make sense for JFSA to tell a newspaper before telling us, while we have an active dialog going on with them.
— CZ (not giving crypto away) (@cz_binance) March 22, 2018
Many Japanese crypto investors are believed to have shifted from domestic exchanges to Binance, whose fees are relatively cheap.
FSA says that the exchange fails to verify the identification of Japanese investors at the time accounts are opened. The Japanese officials suspect Binance does not have effective measures to prevent money laundering, as the exchange handles a number of virtual currencies that are traded anonymously.
Established in 2017, Binance is believed to be the world's largest cryptocurrency exchange operator in terms of the number of currencies handled, about 120, and in the number of traders, 6 million globally.