Binance, the giant cryptocurrency exchange, will be warned by the Japanese financial regulator to halt its operations in the country on pain of criminal charges, according to the Nikkei Asian Review.

Binance moved its headquarters to Hong Kong and set up offices in Tokyo just before the Chinese government began cracking down on the cryptocurrency industry in September 2017. Asked about the move in an interview with Bloomberg TV, Binance CEO Zhao Changpeng said “we generally don’t like to go up against governments”.

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Operating without a licence

Now, the Financial Services Agency of Japan says that Binance has been operating in the country without a licence, which has been a legal requirement for cryptocurrency exchanges in Japan since April 2017.

According to the report, Binance has attracted a large number of Japanese customers with its relatively low fees and has irritated the Japanese authorities by refusing to verify their identities when they open accounts. Because the exchange handles a number of anonymous cryptocurrencies, the authorities fear that the exchange does not have adequate controls in place to prevent illegal activity.

Zhao responds

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.

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— CZ (not giving crypto away) (@cz_binance) March 22, 2018

Binance was indeed the target of a major heist recently, but its automatic safety systems meant that the hackers were unable to get away with the money. This didn’t stop the exchange from putting a 250,000 USD bounty on their heads (that is, for information leading to arrests, lest anyone take that phrase too literally). In addition to that reward, the exchange has set aside 10 million USD specifically for such events in the future.

Binance is currently the biggest cryptocurrency exchange in the world according to coinmarketcap.com, with a daily trading volume of almost 2 billion USD. Its short lifetime has been characterised by rapid and dramatic growth; it made over 7 million USD in profit only three months after launching, and once said that it had taken on 240,000 new customers in the space of one hour, forcing it to temporarily close its registration page.

It has over six million customers and handles over one hundred different coins.

If the FSA does decide to take action against Binance, making it give money back to Japanese customers could be an issue – the Japanese watchdog has no authority in Hong Kong.