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The United States Justice Department is investigating cryptocurrency exchange Binance in connection with possible Russian sanction violations.
So far, neither Binance nor the United States Justice Department have commented on the matter.
Binance Under Scrutiny Once Again
According to a report on Friday, the United States is investigating whether Binance Holdings allowed customers based in Russia to access the exchange. This would be in violation of the sanctions imposed on Russia by the United States following the former’s invasion of Ukraine. The inquiry is being led by the Justice Department’s national security division. Global regulators have consistently advocated stricter controls and regulations on crypto exchanges such as Binance. According to regulators, more stringent regulations could help curb activities such as money laundering and terror financing.
Previous Action Against Binance
The action by the justice department is the latest high-profile action against Binance and follows a 2021 joint investigation with the Internal Revenue Services against the exchange. Binance is also under investigation by the United States Securities and Exchange Commission, which is investigating the company’s relationship with two entities founded by Binance founder Changpeng Zhao. A Binance spokesperson speaking on the matter stated that the company complies with all US and international financial sanctions.
Binance was also sued by the Commodity Futures and Trading Commission (CFTC) in March 2023. The CFTC alleged that Binance knowingly offered unregistered crypto derivatives products in the United States, against federal law. In May 2023, Israel revealed it had seized around 190 Binance accounts with ties to known terrorist groups. However, it still needs to be made clear how Israel managed to seize the accounts since neither Israel nor Binance revealed details about any cooperation. It remains to be seen how Israel seized the accounts since Binance is not obliged to adhere to local laws in Israel.
However, Binance has pushed back against allegations against it, stating that it ensures complete compliance, having assembled the largest compliance team in the crypto space. According to Binance’s head of compliance, Tigran Gambaryan, the exchange’s compliance team addresses over 1300 law enforcement queries every week. The exchange has also claimed that it has figured out how to keep North Koreans off the exchange.
Binance’s Regulatory Woes
Binance has run into trouble with regulators around the world, apart from the seizure of Binance accounts by Israeli authorities. In April, the Australian Securities and Investment Commission (ASIC) canceled Binance’s derivatives license, which allowed it to operate in Australia since 2022. The cancellation was in response to a request submitted by Binance. Dubai’s Virtual Regulatory Authority (VARA) also asked Binance to submit additional information related to the exchange’s auditing procedures, governance, and ownership structure. Binance is also subject to a probe by authorities in Brazil, with the authorities confirming the launch of an official investigation into the exchange. Brazilian authorities allege that Binance did not respond to a stop order that directed the exchange to stop selling crypto derivatives.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.