- The criminal investigation, which began in 2018 against Binance, could be coming to an end and some sources have already spoken about it.
- US Department of Justice prosecutors charges the exchange and its CEO with unlicensed money transmission, money laundering conspiracy, and criminal penalty violations.
- So much is Binance’s control over the cryptocurrency industry that a collapse of the exchange could lead to a never-before-seen collapse in the sector.
- According to a report by Reuters, Binance maintained weak anti-money laundering controls, processed more than $10 billion in payments for criminals and companies seeking to evade US sanctions, and conspired to evade regulators in the country and in other nations.
- To get a dimension of the greatness of the exchange, Binance processed around 1.6 trillion worth of transactions in October alone, roughly half the trading volume of the entire crypto market.
- To deal with all legal issues, Binance retained an outside attorney from the US law firm Paul Weiss, Roberto González, who was previously Treasury’s deputy general counsel.
In 2018, the US Department of Justice began an investigation against Binance primarily for money laundering within the country. Although progress has been made in the case and not much data has come to light, Reuters recently confirmed that the final conclusion is near but was delayed because agency prosecutors disagree on some terms.
The news agency noted that at least half a dozen federal prosecutors involved in the case believe there is already evidence to firmly indict Binance and its CEO Changpeng Zhao, while other magistrates want to take more time to decide, sources said on the matter.
If prosecutors ultimately agree to indict Binance and Zhao, it could catapult into the biggest crash in cryptocurrency history. Let’s remember that recently, one of its rivals, FTX, succumbed and caused the liquidation of tens of billions of dollars in the crypto market.
To go into more detail, the charges under investigation are: money transmission without a license, conspiracy to launder money and violations of criminal sanctions, the four sources told Reuters.
A report by the news agency revealed that Binance maintained weak anti-money laundering controls, processed more than $10 billion in payments for criminals and companies seeking to evade US sanctions, and conspired to evade regulators in the United States and in other countries.
The exchange was not silent on these articles and responded by saying that they are “pushing the highest industry standards ” and looking to “further improve our ability to detect illegal crypto activity on our platform.”
To have a dimension of what Binance is, you only need to look at the latest published data. In October this year, it processed $1.6 billion worth of transactions, which is roughly half the trading volume of the entire crypto market. FTX, on the other hand, showed transactions for 230,000 million.
How did the Binance investigation start?
Prosecutors from the US Attorney’s Office in Seattle targeted the exchange in 2018, following a wave of cases in which criminals used Binance to move illicit funds, the four people familiar with the investigation said.
From there, the Seattle office partnered with MLARS to pursue the case, along with agents from the IRS Criminal Investigation division.
There is an attribute that hurts Binance. And it is that the US Bank Secrecy Act, designed to protect the financial system from illicit movements, requires that cryptocurrency exchanges register with the Treasury Department and comply with the requirements against money laundering if they carry out “Substantial” business in the United States, something Binance has never done.
To avoid legal trouble, Zhao approved a proposal to “insulate” Binance from US scrutiny by creating a new US exchange that would divert the attention of regulators from the main platform, as Reuters reported in October.
In light of the investigation by the Department of Justice, Binance decided to hire an external lawyer from the American law firm Paul Weiss, Roberto González, who was previously deputy general counsel of the Treasury.
