Nazar, who is the nephew of Finance Minister Fernando Haddad, was summoned as a witness to explain the relationship between Binance and companies investigated by the CPI for financial pyramid schemes, such as GAS Consultoria and Rental Coins. The witness did not exercise his right to remain silent as granted by a habeas corpus issued by Supreme Court Justice Alexandre de Morais. Despite the mechanisms described by Nazar, CPI President Aureo Ribeiro (Solidarity-RJ) and rapporteur Ricardo Silva (PSD-SP) stated that testimonies from other individuals under investigation by the commission show that Binance has not been able to prevent fraud involving financial pyramids. “The CPI called Mr. Glaidson Acácio and Francisley Valdevino, from two different companies, who perpetrated million-dollar scams in Brazil. Both claimed to operate crypto assets through the Binance platform,” recalled Ribeiro. “You should know that in every fraudulent scheme we are investigating in this CPI, people mention Binance, it’s incredible,” added Silva.
In response, the Binance executive stated that the company has been one of the victims of these schemes and reiterated that they are working to improve their control processes. “Regarding these pyramid cases, we are reputational victims of these bad actors. I would like to reiterate that for all ongoing or concluded investigations, we work very closely and collaboratively with the authorities,” he said.
The witness also acknowledged, in response to questioning from Ribeiro about ongoing administrative processes, that the company is subject to an administrative proceeding by the Brazilian Securities and Exchange Commission (CVM) for offering derivatives to Brazilians without authorization. According to Nazar, the issue has already been addressed.
Taxation
In response to questions from several deputies, the witness admitted that Binance does not pay taxes in Brazil. “Binance operates under an international brokerage model, so the buying and selling of crypto assets does not occur in the country,” he said. However, he acknowledged that the sector’s regulation to be defined by the Central Bank may establish a taxable event for these operations in Brazil. Deputy Alfredo Gaspar (União-AL) insisted, “Do you charge brokerage fees for crypto asset transactions?” he asked. “The fee charged is for intermediation,” replied Nazar. “And do you pay the Municipal Service Tax (ISS) on this fee?” continued the deputy. In response, Nazar reiterated that the taxable event of the crypto asset buying and selling operation does not occur in Brazil, therefore, there is no obligation to pay taxes in the country. “What we have are residents in Brazil who deposit their reais and then have the power to buy crypto assets, which are not held here, in their Binance account. So, there is no physical taxable event on-site,” he declared.
Money Laundering
As rapporteur of the CPI, Deputy Ricardo Silva mentioned an analysis conducted by AML Reputational that allegedly identified a 95% chance of money laundering operations among the top 700 Binance users. Silva informed the committee that the CPI will send a letter to Binance requesting the list of these top 700 clients in Brazil.
Booking and Hurb
During the same meeting, the CPI on Financial Pyramids also heard representatives from Booking and Hotel Urbano (Hurb), both companies in the lodging reservation sector, who denied any involvement in financial pyramid schemes and only reported management issues in handling customer demands.
Nelson Benavides Junior, representative of Booking, stated that the delays in payment transfers to partner hotels and inns were related to maintenance in the company’s systems and only affected a portion of the payments. According to him, the company differs from others being investigated by the CPI as it only intermediates services with defined dates provided by the lodging establishments. “When a consumer purchases a service through the platform, they receive an immediate confirmation of the reservation with the specified dates. There is no use of vouchers, point systems, mileage programs, or transactions with cryptocurrencies. We do not work with flexible prices or offer discounts,” he emphasized.
João Mendes, president of Hotel Urbano (Hurb), told the deputies that he feels ashamed for not being able to honor commitments made to customers. “I am ashamed to delay payments to any of my customers. It means that I made a mistake somewhere,” he admitted. In April, the company was at the center of a crisis involving thousands of customers who arrived at hotels and inns recommended by the company but were unable to check-in due to non-payment. The complaints led the National Secretariat for Consumer Affairs (Senacon), under the Ministry of Justice, to prohibit the company from selling flexible packages. Mendes stated to the CPI that the company does not operate a financial pyramid scheme and argued that the current crisis is the result of a series of unexpected events. “I acknowledge that there are financial problems, but I am confident in the company’s recovery and the rehiring of some employees. We have never been involved in a financial pyramid scheme. The business is viable, healthy, and fully capable of recovering,” he declared. According to Mendes, 17,000 Hurb customers are still waiting for refunds and 36,000 are waiting for their trips to take place.