Binance Under Investigation in the US
Binance, the world’s largest crypto exchange is said to be under investigation by the US Department of Justice and the Internal Revenue Service (IRS).
According to Bloomberg, government officials are digging
into possible money laundering and tax infractions. The report cited
individuals with knowledge of the matter.
A Binance representative, Jessica Jung, issued the following
statement:
“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.”
Binance is far larger than the competition. The most recent
trading 24-hour trading volume indicated over $80 billion in transactions with
its nearest competitor generating less than half that amount.
Founded by CEO Changpeng “CZ” Zhao in 2017, the crypto
exchange was originally based in China but has since exited the country.
According to the aforementioned report, Binance is incorporated in Cayman but
lacks a single corporate headquarters. Binance.US is a US-based exchange that
is affiliated with the parent company that was created solely to target the US
market.
Bloomberg cites information from Chainalysis that indicates
funds affiliated with illicit activities went through Binance more than any
other exchange.
Recent rules require that crypto exchanges to maintain both
buyer and seller information for possible scrutiny by regulators. It is not
certain how rigorous Binance is in complying with these demands but in the
early days of crypto KYC and AML restrictions were fairly lax.
Recently, SEC Chairman Gary Gensler stated that crypto exchanges
needed additional regulation regarding investor protection. The possible
investigation of Binance, along with a regulatory transition with the Biden
Administration, may foreshadow additional scrutiny for the entire crypto
exchange sector.
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