Binance set to close prime brokerage loophole

Binance has announced that it will be addressing a loophole in its Link Program that allowed certain prime brokerages to exploit the multi-tiered fee structure offered by Binance.
According to a report from Bloomberg, top-tier brokerage partners were able to take advantage of discounts on trading fees by combining multiple accounts and sometimes even trading on behalf of their clients, thereby pocketing the price difference.


Participating platforms in the Link Program could also lure in customers by passing on their savings to potential clients and offering attractive trading fees not available on the retail market.
The crackdown on arbitrage schemes used by some Link Program clients is tailored to institutional clients, but signals a broader effort by the exchange to prevent misuse of the platform.
In June, Binance made an announcement encouraging users to report any instances of suspicious activity, such as fee arbitrage or Know Your Customer breaches by institutional accounts, and they will be rewarded for reporting verified cases of policy violations and bad actors.
Despite regulatory challenges, Binance continues to emphasize its dedication to compliance. Its former CEO, Changpeng Zhao, reached a $4.3 billion settlement with the United States Department of Justice in November 2023 for alleged violations of the Bank Secrecy Act and provisions tied to Anti-Money Laundering regulations in the country.
Binance.US, a separate entity, also faces regulatory obstacles from U.S. lawmakers. In June, North Dakota officials revoked Binance.US’ money transmitter license, effectively banning the exchange from operating in the state.
Earlier this year, Binance agreed to exit Nigeria amid accusations of tax evasion and money laundering from the Nigerian government, which also accused Binance of causing shortfalls in the local Nigerian currency. Additionally, the exchange platform was fined $2.25 million by India’s Financial Intelligence Unit (FIU) for allegedly breaking Anti-Money Laundering regulations in the country.