Binance under investigation by US agencies over money laundering
Binance is facing a raft of legal challenges in the US with the Internal Revenue Service (IRS), Department of Justice (DoJ), and the Commodity Futures Trading Commission (CFTC) investigating the top crypto exchange.
The IRS and DoJ are probing individuals involved with Binance for information relating to money laundering and tax offences, according to a report from Bloomberg.
However, as the exchange hasn’t yet been accused of any wrongdoing, it appears the focus may be on its customers.
As Binance operates in various jurisdictions (it’s incorporated in the Cayman Islands and has an office in Singapore), the company has been able to avoid the prying eyes of many official bodies.
However, that didn’t stop blockchain forensics firm Chainalysis publishing a report last year revealing it’s the chosen exchange for money launderers alongside Seychelles-based Huobi.
Indeed, according to its 2020 Crypto Crime Report, money launderers used Binance to wash around $770 million of illicit dough — nearly 30% of all cash moved through exchanges in 2019.
Coincidentally, Chainalysis works with a number of US government agencies.
Money laundering aside, what about those derivatives
If Binance manages to get the IRS and the CoJ off its back, the company still has the CFTC to contend with.
Reports broke in March that the market regulator was investigating whether Binance allowed users to buy derivatives linked to crypto assets via its platform.
If so, this would be illegal as US residents are only allowed to buy these products from firms registered with the CFTC. Binance is not that.
Binance has previously said it blocks US-based traders from using its exchange and threatened those who violate the rules with having their accounts locked.
Unfortunately, details of the ongoing investigations are currently a little thin. Binance said it doesn’t comment on specific inquiries.
However, Binance did respond to the news of the investigations with a stock message, telling both outlets and its Twitter followers the company “takes its legal obligations very seriously.”
[Read more: Germany says ‘nein’ to Binance, stock token warning stays]
A spokesperson also tweeted that Binance has a “robust compliance program” and utilizes anti-money laundering tools.
Edit 10:01 UTC, May 16: Article has been updated with dates of CFTC reports, headline for clarity.