Shankar Iyer
Binance is facing a probe by the United States Department of Justice and the Internal Revenue Service, according to a Bloomberg report. The exact reason for the probe is still unclear and the Justice Department and the IRS have declined to comment as yet. It is a developing story and no accusations or charges have been levelled on the cryptocurrency exchange till now.
The publication quoted Binance spokesperson Jessica Jung saying that “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.”
Binance probe by DOJ, IRS and CFTC
Regarding the DOJ and IRS investigations, Bloomberg cited unnamed sources claiming that people with deeper insights on how Binance operates are being questioned by the federal bodies. It also states that officials from the Internal Revenue Services were looking into the conduct of Binance employees and customers.
In March 2021 the Commodity Futures Trading Commission (CFTC) was investigating Binance, CoinDesk reported. The federal body was trying to ascertain if the exchange supported derivatives trading transactions by U.S. residents.
In October 2020, a Forbes publication alleged that Binance’s US division intended to evade regulators like the Securities and Exchange Commission, CFTC, the U.S. Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Asset Control (OFAC).
The exchange hired Max Baucus as its policy advisory in March this year. Max Baucus was a former U.S. Senator and the Ambassador to China. The current CEO of the U.S. unit of Binance, Brian Brooks was the Acting Comptroller of the Currency till January 2021.
Binance in the US
Currently headquartered out of Cayman Islands (formerly based out of Hong Kong), Binance exchange announced plans to support American cryptocurrency investors in June 2019 through its dedicated digital assets trading platform BAM Trading Services. It allowed buying, selling and staking cryptocurrencies for U.S residents. The services were restricted for investors from the states of Connecticut, Hawaii, Idaho, Louisiana, New York, Texas, and Vermont (VT) — according to the terms of use published on Binance.US.
Binance and the Chainalysis 2020 Crypto Crime Report
New York-based blockchain analysis company — Chainalysis Inc, in a report last year claimed that crypto exchanges facilitated routing of illicit money to the tune of approximately USD 28 billion in 2019. Of this, 27.5% were routed through Binance, followed by Huobi with 24.7% transactions. The report states that collectively 300,000 unique accounts from both these exchanges were beneficiaries of such transactions.
