Reuters World News - DeSantis’ challenge, a Pacific pact and commingling at Binance

Episode Date: May 23, 2023

Florida Governor Ron DeSantis is widely expected to throw his hat in the ring for the presidency this week. Which part of the conservative spectrum should he woo? Plus, a Reuters investigation reveals crypto giant Binance mixed customers funds with company revenues, and a new defense pact aimed at tackling China’s influence in the Pacific. Visit the Thomson Reuters Privacy Statement for information on our privacy and data protection practices. You may also visit megaphone.fm/adchoices to opt-out of targeted advertising. Learn more about your ad choices. Visit megaphone.fm/adchoices

Today, a new pact in the Pacific as Washington seeks to re-exert its influence among the island nations. Crypto-platform Binance is in the spotlight. And what lies ahead for Rhonda Santis as he seeks to win a fractious Republican Party nomination? It's Tuesday, May 23rd. This is Reuters World News, bringing you everything you need to know from the front lines in 10 minutes. I'm Kim Vinal in London. And I'm Christopher Waljester in Chicago. I thought the meeting was productive.

I thought it was more productive than the other meetings we had, but we still have differences. House Speaker Kevin McCarthy after talks with Joe Biden and still no agreement on raising the debt ceiling. We left the meeting directing the members and the staff to get back together, work through the night, knowing where some of our differences lie, see if there's other ideas of where we could work through.

White House and congressional negotiators will meet again on Tuesday to try and break an impasse that risks tipping the United States into default. With little over a week to go before the Treasury runs out of money, McCarthy and Biden have to square the Republicans' demand for spending cuts, with Biden's push for new taxes. So expect plenty more talking until then. Now, to what else we're across today. It looks like the biggest cross-border incursion from Ukraine since the war began 15 months ago. Russian governor, Vyachislav-Gladov, says forces are pressing on,

with a counter-terrorism operation in Balgarod. And that security restrictions are in place after eight people were injured. Moscow said there was an attack by Ukrainian saboteurs. But Ukrainian media says two armed Russian opposition groups were responsible for the attack. Stay across Reuters.com for more. Turkey's president, Tayyip Erdogans, received a big boost ahead of Sunday's runoff election. Sinan Owan, who came through. third in the first vote with 5.2% support has now endorsed Erdogan for Sunday's vote against

Kimal-Klechtaolu. In Brazil, a state of animal health emergencies been declared after avian flu was detected in wild birds. The world's biggest chicken meat exporter has confirmed eight cases of the H5N1 strain. We are deeply invested in the Indo-Pacific because our planet's future is being ridden here. Papua New Guinea is playing a critical role in shaping our future. Secretary of State Anthony Blinken in Port Moresby after an historic agreement with Papua New Guinea. Blinken, of course, stood in for President Biden, who cancelled a visit to get home to tackle the debt ceiling.

The Defence Pact seeks to counter China's influence in the Southern Pacific. Kirsty Needham in Sydney has covered the Pacific Islands' response to US-China tensions. Kirstie, how important is this pact? This deal is hugely significant, not just for Papua New Guinea, but for the Pacific Island regions where there's been increasing tensions between Washington and Beijing. About a year ago, Solomon Islands, another quite large Pacific Island nation, surprised many by signing a security pact with Beijing. And since then, there's been real concern about China's military ambitions in a region

that was quite pivotal in World War II for the United States being able to, move westwards across the Pacific and liberate Philippines. There were some very fierce battles fought in Papua New Guinea, Solomon Islands and another country called Vanuatu. How does this help Washington's security goals in the region? There's a lot of scrutiny on why China is wanting to increase its security presence there. The deal signed with Papua New Guinea is seen as significant in putting the United States presence back in the Pacific Islands after a long absence after the Cold War. What do the people in Papua New Guinea, make of the pact? There have been some protests at university campuses and that reflects a lot of concern

and uncertainty over how China, which is a major trading partner with PNG, would react to this deal. But Papua New Guinea's Prime Minister, James Marrape, has assured his public today that this is in the best interest of the country, that the US would also bring economic ties, investments, and it would really help rebuild the military capability of this. Pacific Island nation after decades of neglect. Was Biden's no-show a big problem? There had been some initial concern that this could be seen as the US not showing it was serious about its engagement with the Pacific Island region.

But that was nicked in the bud by Biden making a phone call from Air Force One to P&G leader Marrape's mobile phone last week and to assure him that, you know, the US is keenly interested in its ties with the Pacific and inviting about a day. dozen Pacific Island leaders to continue the discussion in Washington later this year. Florida Governor Ron DeSantis is ready to launch his official campaign for the Republican nomination for president. What will it take for him to win over the various factions in the GOP? Jim Oliphant in Washington, D.C. is following DeSantis's journey. Jim, how is DeSantis trying to appeal to voters from across the conservative spectrum? Well, I would say that what

Governor DeSantis is doing right now is really zeroing in on the most conservative voters in the Republican Party. And we've seen that through a lot of legislation that he's supported in Florida. What DeSantis still needs to do is to do a little more to appeal to what you might call the Mitt Romney voter, the Republican Party. That has sort of, of course, fallen out of favor in the era of Trump, but you still need those people. You need those people to come out for you in the primary, and you need those people to come out for you in the general election. And on that count, he's struggling a bit. And if you add on top of that his ongoing feud with Disney,

a lot of pro-business Republicans have stepped back and said, you know what, this is not who we are. He really does have some bridges to build with what you might call pro-business, good government, strong foreign policy Republicans. Can you have your feet in both camps? No, you really can, at least not right now, right now, Desanis doesn't have a strong base anywhere in the party. So, you know, he needs to pick a lane.

We sort of drilled down into some of the polling data. A dissantis supporter looks like what you might think a dissentist supporter looks like, which is a suburban voter, a college-educated voter. They might drive an SUV instead of a pickup truck. They might care a little bit more about corporate regulation and low taxes and just sort of like what you might call, you know, you're business-friendly Republican. That is the voter who is probably, least inclined to support Trump and most inclined to support a guy like DeSantis. But DeSantis hasn't done a lot of work yet in pulling in those kinds of voters. And that's going to be the challenge for him going forward.

You know, one thing, though, in his favor is that he simply is not Donald Trump. And so for all the voters out there, they're looking for an alternative to Trump. They at some point may not care so much about what DeSantis supports or his particular policies. they just say, can you beat Trump? Can you make sure Trump's not the nominee? And if DeSanis starts looking viable, they will flock to him. Binance is the world's largest marketplace for buying and selling virtual currencies. But its finances are opaque.

A Reuters investigation published today shows that Binance commingled customer funds with its own corporate funds. That's a red flag because client funds are not easily identifiable. Angus Berwick in London is one. one of the reporters on the story. Angus, Reuters found no evidence that Binance client monies were lost or taken. Why should we care that customer funds have been mingled with corporate money? So firstly, the U.S. Securities and Exchange Commission requires all trading firms to keep this very firm divide between customer funds and corporate revenues. And the rules exist because in the event that a company goes bankrupt or in the event that there is any kind of fraudulent

activity at a company. Customers should have the confidence that the company still retains their money and is able to make them whole again. And of course, we saw this co-mingling of funds with FTX, the major crypto exchange, which collapsed infamously last year. Yes, exactly. So the SEC and the DOJ both accused Sandbank and Freeds, FTX's owner of co-mingling customer funds in a trading firm. The FTCX case really does illustrate that once customer money becomes lost, it's very easy for it then to become victim of a fraud. So how have Binance responded to this? So Binance told us that they don't consider this to be commingling because the transfers to the Silvergate account, they say were in fact user purchases and not user deposits. Now it's important to make clear that

Binance during the period that our reporting is focused on, repeatedly told customers that these were deposits and that customers were able to withdraw these funds as dollars when they liked. And when we spoke with former US regulators, they said that these representations gave customers the confidence that their funds were being treated like traditional cash deposits. What are the tax implications of moving money around like this? So Binance, infamously, has never disclosed where its platform is actually located. What our reporting showed is that by moving a significant amount of their revenues, recycling those revenues into crypto and then returning them to the platform,

it effectively kind of meant that they weren't required to then disclose those revenues or pay taxes on any profits that they were booking. That's it for today's edition of Reuters World News. We'll be back tomorrow. To get all our shows in your podcast feed, make sure to follow us on your favorite platform or download the Reuters app.