Binance’s $39m Community Chest Fund pledge scrapped over reputational concerns

Updated at 11.50am with comment from Binance

The Malta Community Chest Fund has walked away from a crypto donation from Binance now worth $39 million over reputational concerns about the source of funds, Times of Malta is informed.

In 2018, at the height of Malta’s ill-fated push to become a blockchain island, Binance, the world’s largest crypto exchange, had pledged some $200,000 (approximately €172,000) worth of its crypto coin, BNB, to cancer patients.

The donation was to take place through the Blockchain Charity Foundation, its non-profit charity arm.

By 2021, the funds remained in limbo, locked in a legal dispute over how they would be administered.

Binance insisted funds should be sent directly to patients’ crypto wallets, rather than first disbursed to MCCF, as is typically the case.

MCCF, however, refused to hand over sensitive patient data, accusing Binance of attempting to renege on agreements and trying to liquidate its charitable foundation.

The case was only recently dropped, with court records showing that the two sides reached an out of court settlement on Tuesday.

The value of the donation skyrocketed to €7m by 2021, as the coin’s value increased. Its value continued to rise, with the initial €200,000 donation now valued at just short of $39 million (roughly €33.5 million), more than six times the amount raised in last year’s edition of L-Istrina.

In a post on X on Monday, Conor Grogan, the director of crypto exchange Coinbase, said the donation remains “untouched”, urging Maltese citizens to push the government to reclaim the funds.

However, an agreement signed quietly earlier this year effectively rescinded the 2018 pledge. The move to scrap the agreement is believed to be driven by reputational concerns over the origins of the funds and Binance’s operations.

When contacted, a spokesperson for MCCF confirmed that it “no longer has a relationship with The Blockchain Charity Foundation”.

It added: “The Malta Community Chest Fund is always mindful of its good name and reputation and treasures the faith in it expressed constantly and repeatedly by its bona fide donors and the general public."

When contacted, a Binance spokesperson told Times of Malta "we will ensure these funds are spent in Malta, and we thank Malta for its past support of Binance”.

The company has faced several serious allegations in recent years.

In 2022, a Reuters investigation concluded that Binance was “a hub for hackers, fraudsters and drug traffickers”, finding that it had been used to launder over $2.35 billion in illicit funds.

Meanwhile, a collaborative investigation between Times of Malta and Amphora Media published in February found that Halil Falyalı, a murdered Turkish-Cypriot illegal gambling magnate, used Binance to funnel over $29 million funds.

In 2023, the firm was hit with a $4.3 billion fine, with its founder and CEO Changpeng Zhao pleading guilty to money laundering charges. Prosecutors argued that Binance had failed to report over 100,000 suspicious transactions involving terrorist organisations, including al Qaeda and ISIS.

Zhao, cited by Forbes as the 20th richest man in the world, was eventually sentenced to four months imprisonment. Meanwhile, Binance accepted responsibility and pledged to tighten its anti-money laundering procedures as part of a plea deal.

Earlier this year, French investigators opened a probe into money laundering and tax fraud charges at Binance, which denied the allegations.