UK Financial Conduct Authority Issues Statement on EQONEX Limited and Transaction with Bifinity, a Firm Related to Binance

The UK Financial Conduct Authority (FCA) has issued a statement pertaining to EQONEX Limited and the Binance Group stating that Bifinity will advance a USD $36 million in a convertible loan to EQONEX.

EQONEX is a firm based in Singapore that is listed on the NASDAQ under ticker EQOS. It offers trading in crypto on an “institutional-grade exchange,” according to its website.

In a tweet, EQONEX shared that it has partnered with Bifinity, Binance’s payments tech affiliate.

Binance announced today the creation of Bifinity as a payments technology company and official fiat-to-crypto payments provider. Bifinity’s services are designed to allow businesses to adopt crypto and reach new audiences direct fiat-to-crypto transactions. Bifinity is also partnered with payments platform, Paysafe and global payments processor, Checkout.com,

According to EQONEX, the strategic partnership means that Bifinity will advance a US$36 million convertible loan to EQONEX and will work to maximize business synergies. In addition, Bifinity will have the right to appoint the Chief Executive Officer, Chief Financial Officer, and Chief Legal Officer of EQONEX as well as nominate two seats on EQONEX’s Board of Directors.

Under the terms, Bifinity is said to have issued EQONEX a US$36 million convertible loan facility with an 18-month maturity from each drawdown date. The initial conversion price is US$1.89 per share, set with reference to the 50-day average closing-price of EQONEX shares immediately prior to the date of the Loan Agreement.

Both companies expect to continue to engage in non-binding discussions to explore potential merger opportunities, subject to regulatory approval.

The FCA states that they are aware of this relationship and Eqonex Limited is the parent company of Digivault Limited, one of the cryptoasset businesses registered by the FCA under the Money Laundering Regulations (MLRs). Due to the terms of the transaction, individuals and entities that are part of the Binance Group may have become beneficial owners of Digivault for the purposes of the MLRs.

To quote the FCA:

“The FCA did not have powers to assess the fitness and propriety of the new beneficial owners or the change in control before the transaction was completed. We have, however, previously published information about our concerns about Binance. The Binance Group includes Binance Markets Limited. Binance Markets Limited is regulated by the FCA for a limited set of activities. No other entity in the Binance Group holds any form of UK authorisation, registration or licence to conduct regulated activity in the UK. Due to requirements imposed by the FCA, Binance Markets Limited is not currently permitted to undertake any regulated activities without the written consent of the FCA. This requirement was put in place because, in the FCA’s view, Binance Markets is not capable of being effectively supervised. This is particularly concerning in the context of Binance Markets’ membership of the global Binance group, which offers complex and high-risk financial products posing a significant risk to consumers.”

The FCA adds that it can move to suspend or cancel the registration of a crypto firm if they deem the beneficial owner is not “fit and proper.” The FCA  may also suspend or cancel a firm’s cryptoasset registration.

In 2021, the FCA effectively banned Binance from activity in the UK.

The FCA said that until issues are addressed the concerns about Binance Markets Limited remain.

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