Bitcoin exchange Binance faces legal probe amid crackdown on crypto crime

·2-min read
Binance's chief executive said the majority of the 4 million accounts he oversees are largely male customers with an average age of 25-35 (Shutterstock)
Binance's chief executive said the majority of the 4 million accounts he oversees are largely male customers with an average age of 25-35 (Shutterstock)

Binance, the world’s largest cryptocurrency exchange, is reportedly under investigation for allegedly allowing illegal trades on the platform.

The platform, and the cryptocurrency industry, has operated without much government oversight, with Binance itself incorporated in the Cayman Islands with an office in Singapore, but has no corporate headquarters.

Officials from the US Justice Department and Internal Revenue Service have apparently sought information from individuals with insight into Binance’s business, Bloomberg reports.

More funds tied to criminal activity use Binance than any other crypto exchange, according to blockchain analysis firm Chainalysis. In 2019, that reportedly accounts for $756 million of $2.8 billion worth of criminal transactions.

Officials apparently expressed concern that cryptocurrencies are being used for illegal means, including theft and drug deals, as well as tax evasion. It is unclear specifically what the agencies are investigating, but scrutiny from the IRS indicates they are reviewing Binance’s customers and employees, according to Bloomberg.

The US Commodity Futures Trading Commission is also reportedly investigating Binance to ascertain whether BInance let investors buy derivatives linked to digital tokens – something that is not permitted in the United States unless the firms are registered with the commission.

Before Binance’s US website, Americans were apparently advised to use a VPN to disguise their location when seeking access to the exchange, according to “one person familiar with Binance’s operations”. Binance denied that claim to Bloomberg, saying that would have “always been contrary to our company’s principles.”

The United States’ Internal Revenue Service was not immediately available for comment. The Department of Justice did not respond to a request for comment before time of publication.

“We take our legal obligations very seriously and engage with regulators and law enforcement in a collaborative fashion. We have worked hard to build a robust compliance program that incorporates anti-money laundering principles and tools used by financial institutions to detect and address suspicious activity”, a Binance spokesperson said in a statement to The Independent.

“We have a strong track record of assisting law enforcement agencies around the world, including in the United States. We don’t comment on specific matters or inquiries.”

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