Binance, the world's largest crypto exchange with roughly 62 million users, is reportedly under scrutiny from French financial regulatory authorities.
According to a from Le Monde, investigations into the exchange's activities were to have been underway since at least the early quarter of 2022.
The inquest, led by the judicial investigation service of finance and under the specialized interregional jurisdiction of Paris, has brought into question the exchange's adherence to legal norms.
Reportedly, the focus of the probe revolves around "acts of illegal exercise of the function of service provider on digital assets (PSAN), and acts of aggravated money laundering." Particularly, the exchange is being examined for its participation in investment operations, concealment, and conversion - all purportedly carried out by offenders that generated profits.
Offhand, however, these allegations appear to be more a matter of misinterpretation and miscommunication withe the regulatory body than a wilful abandonment of due diligence from the side of Binance.
Binance Commits To KYC Procedures
Simultaneously, questions have been raised about Binance's commitment to 'Know Your Customer' (KYC) procedures, a regulatory framework meant to curb money laundering activities. Reports suggest that Binance may not have been fully compliant with these protocols, leading to further speculation about the exchange's operations.
To further complicate matters, it's alleged that Binance had been offering services to French customers without obtaining an appropriate operating license. Regulations enacted in 2019 require crypto exchanges to gain the approval of the Financial Markets Authority (AMF) to legally operate in France. Binance commenced operations in France in 2020 but purportedly only secured AMF approval in May 2022, fueling further controversy.
In response to the claims, a Binance spokesperson maintained that the company cooperates with global law enforcement and abides by all local laws. However, they refrained from commenting on specifics about the investigation.
"Binance invests considerable time and resources into cooperating with law enforcement globally. We abide by all laws in France, just as we do in every other market we operate," the exchange said in a tweet thread responding to reportage on the matter.
To clarify:— Binance (@binance) June 16, 2023
In France, on-site visits by regulators and inspectors, are part of regulatory obligations to which all financial institutions must adhere.
We had an on-site visit last week by the relevant authorities. Binance, as always, was fully collaborative and we met our…
Binance: Between Compliance and Current Charges
This French investigation comes amidst Binance . The U.S. Securities and Exchange Commission (SEC) has brought forward against the crypto exchange's U.S. subsidiary and CEO Changpeng Zhao. Recent reportage also indicate that Binance.US has also amid the ongoing legal troubles.
These revelations underscore the challenging terrain for Binance, as well as for similar platforms such as . As of mid-2022, the SEC stated that out of the 62 million users on Binance globally, only 25 million had filled in KYC documents. This implies a substantial proportion of users on the platform are operating without the requisite KYC documentation.
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