Binance is under investigation for several accounts of money laundering and tax offenses by the Justice Department and Internal Revenue Service. The Securities and Exchange Commission (SEC) also issued a subpoena to Binance.
Operating out of the Cayman Islands with an office in Singapore, the exchange largely avoided government oversight, until the end of 2020, when the company was asked to hand over messages from CEO Changpeng Zhao and 12 other executives, as well as any company records with instructions that “documents be destroyed, altered, or removed from Binance’s files” or “transferred from the United States.”
Around that time, Chainalysis Inc., a blockchain forensics firm with clients including U.S. federal agencies, had found that among transactions that it examined, more funds tied to criminal activity flowed through Binance than any other crypto exchange.
A Reuters report further uncovered that certain loopholes in Binance’s compliance program, including the ability to register with just an email address, enabled criminals to launder at least $2.35 billion in illicit funds through the exchange, a number of which serving traders in Iran despite U.S. sanctions.
According to Patrick Hillmann, Binance’s Communications Chief, this is an industry-wide inquiry. He said: “Regulators across the globe are reaching out to every major crypto exchange to better understand our industry. This is a standard process for any regulated organization and we work with agencies regularly to address any questions they may have.”
CEO Changpeng Zhao also appears unshaken. On Thursday, he tweeted: “Another story today about a crypto company receiving an inquiry from a regulator. A request to VOLUNTARILY share certain information back in 2020, which we did. Important for the industry to build trust with regulators. My chat messages are semi-public anyway.”
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