Binance donation agreement was ‘very one-sided’, says former MCCF chair

The agreement under which Binance pledged to donate an initial $200,000 (€172,000) in cryptocurrency to the Malta Community Chest Fund Foundation (MCCFF) was deemed to be “very one-sided” and “not acceptable”, a former chair of the fund’s administration told Times of Malta.

Marlene Mizzi chaired the fund’s administration in 2021, under President George Vella, at a time when it first launched legal proceedings against Binance to safeguard the donation.

On Thursday of last week, Times of Malta revealed that the pledge, which has now ballooned in value to reach almost $39 million (€33 million), has been scrapped over reputational concerns.

Later the same day, Mizzi took to Facebook to describe the decision to renounce the funds as “short-sighted”, arguing that the funds ultimately belong to MCCFF.

The agreement between Binance and MCCFF was signed in 2018, during the presidency of Marie Louise Coleiro Preca and at the height of Malta’s ill-fated Blockchain island ambitions.

Nevertheless, Mizzi says the MCCFF administration in 2021 had identified several flaws in the original 2018 agreement, after appointing a team of experts to vet the contract.

“When the contract between MCCFF and Binance Malta was found, it was analysed by the legal team of the President (George Vella) and instructions were given to find out what it was all about,” Mizzi told Times of Malta.

By that point, Mizzi said, the initial $200,000 (€175,000) investment had already ballooned to “about €25 million”.

Mizzi says MCCF held a series of online meetings with the Binance team in Hong Kong “to try to come to an agreement regarding the funds and how they could be utilised as per contract” but this proved difficult because of the agreement’s terms.

“The contract was very one sided, with clauses that were not acceptable to us,” Mizzi said, pointing to several “red lines”.

These included obliging sick individuals requiring funds to finance their treatment to open a crypto wallet in order to receive their funds in cryptocurrency, as well as Binance being granted access to details of persons seeking help from MCCFF.

Ultimately, Mizzi said, MCCFF “could not access funds without Binance’s authorisation”.

According to Mizzi, lengthy negotiations provided “light at the end of the tunnel because they started to accept some of our conditions”.

Nevertheless, MCCF launched court proceedings when it learned that Binance planned on closing its Malta-based charity and relocating it to the United States.

“This would have meant that we would have lost control completely and a motion of prohibitory injunction was filed and upheld,” Mizzi said.

Mizzi says she eventually left the MCCFF administration in late 2021, with both the court case and out-of-court negotiations ongoing and “lost touch with this matter completely”.

Should the funds have been turned away?

The debate over whether MCCFF should have renounced the funds has spilled over into the political arena, with Prime Minister Robert Abela saying MCCFF acted too hastily. Several other Labour MPs, including Edward Zammit Lewis and Rosianne Cutajar, backed Abela’s position.

And PN leader Alex Borg, told Lovin Malta that if the funds are legal, they can be used “to do a lot of good”.

Finance Minister Clyde Caruana, however, supported President Myriam Spiteri Debono’s views and told the audience at a Times of Malta pre-budget event this week that “you either donate to charity, or you don’t. You don’t dance around it”.

Meanwhile, Abela on Wednesday said he was in discussions with Binance to secure the company’s $39 million donation, when asked about the matter by Times of Malta.

“There are ongoing discussions at my level,” the prime minister said when asked whether he was pushing for the funds to remain in Malta.

“I am not there yet, but I will continue to do everything possible to bring those $39 million to our country to be used by our patients who need them,” Abela said.

Mizzi argues that the matter ultimately boils down to two questions, namely, whether the donation belongs to MCCFF and whether the donation was the result of dirty dealings.

If the money does belong to MCCFF, a matter that Mizzi says “was never refuted” by the Binance team during their negotiations, then “the foundation has the obligation to recover what rightfully belongs to it and utilise it in the honourable way it has always done”.

Meanwhile, unless there is knowledge or proof that this donation has illegal origins, “it is very cavalier for a charitable organisation to refuse $39 million just because one does not approve of Binance’s reputation”.

“The reputation of Binance has nothing to do with whether these funds rightfully and legally belong to MCCFF,” Mizzi said.

If, on the other hand, “the president has knowledge or proof that this fund is the result of dirty business, then I can understand the stand taken,” Mizzi said.