Binance is a cryptocurrency exchange that was founded in 2017. Currently, finance is considered the worlds largest cryptocurrency exchange. Despite its size, binance is the next target for the U.S. Government and is currently under investigation. Both the Department of Justice and the Internal Revenue Service are have their radar on binance and are looking for any financial crimes.
Since its founding, Binance Holdings Ltd. operated across different parts of the world. The financial behemoth also has smaller derivatives of its trading platform. Most have been barred from operating in the United States.
The crypto exchange has effectively managed to project its status above the level of its peers. This was done through a host of policies and regulatory hires, including former U.S. lawmaker Max Baucus. Brian Brooks, a former expert in U.S. banking regulation was appointed CEO of the organization’s U.S. affiliate last month.
A spokesperson for Binance commented on the latest predicament. The spokesperson asserted her organization adheres to all legal requirements. This also concerns the engagement of regulators and respective law enforcement agencies.
The spokesperson emphasized they have endeavored to construct a robust regulatory compliance program. It was mentioned that the program comprises the requisite anti-money laundering policies. This includes various tools and protocols needed to investigate and address potential criminal activities.
No specific charges have been spelled out under the current probe. The fact that money laundering and tax enforcement officials are involved spells trouble. This points to clues of potential tax fraud or other cryptocurrency crime.
Binance brushes off accusations
Changpeng Zhao (CZ), the CEO of binance was quick to dispel any current report of any wrongdoing. While referring to an article by Bloomberg on twitter, CZ condemned the 'misleading title'. The organization also brushed off any claims of working with law enforcement to target any bad actors.
Although Changpeng brushed off any claims of wrongdoing, the exchange still took a hit. Binance coin took a major hit falling over 30%. The coin reached as low as $250 USD. Additionally other cryptos took a small hit too. Bitcoin and Ethereum suffered from the negative publicity as holders rushed to sell their coins.
Looking back, another Bloomberg article had reported more information about possible binance crime. According to the article, the Commodity Future Trading Comission (CFTC) was probing binance in march. This is due to different 'irregularities'. According to the bloomberg post, the authorities are trying to figure out if Americans traded crypto derivatives on the non U.S. platforms.
Responding to the investigations, binance made a statement opposing the investigation. Binance claims that it has always prevented U.S. residents from investing into product that demand CFTC registration. The exchange also stated it has a strong adherence to all regulatory obligations and laws. This applies to every country binance operates in.
In 2019, chainalysis published a, report on criminals and crypto-exchanges. According to the leading blockahain analytics firm, crypto exchanges have always been popular among criminals. This includes criminals looking to launder illegally acquired currencies.
The report also indicated a growing increase in crypto exchange usage. This is from the beginning of 2019. The firm intimated that analysis of trends showed that over $2.8 Billion USD worth of Bitcoins are laundered annually. Chainalysis found that Binance and Huobi accounted for over half of this figure.
Point to note, Binance and Huobi happen to be the world’s two biggest exchanges. The fact that the two largest Cryptocurrency entities are the favorite amongst criminals is surprising. This contradicts the assumption of exchanges constantly working under law enforcement scrutiny. The above reality challenges the expectation that both organizations adhere to KYC/AML protocols.