As part of an investigation into Binance’s compliance with U.S. financial crime laws, federal prosecutors have asked the cryptocurrency exchange to provide internal records about its anti-money laundering checks, along with communications involving Binance CEO, Changpeng Zhao.
According to reports, in 2020, the United State’s money laundering division of the Justice Department had solicited Binance to voluntarily hand over messages from Zhao and 12 other executives and partners on matters including the exchange’s detection of illegal transactions and recruitment of U.S. customers. The regulatory agency had also asked for any company records with instructions that “documents be destroyed, altered, or removed from Binance’s files” or “transferred from the United States.”
Another story today about a crypto company receiving an inquiry from a regulator. A request to VOLUNTARILY share certain information back in 2020, which we did. Important for the industry to build trust with regulators.
My chat messages are semi-public anyway. pic.twitter.com/h35Xd4tZhf
— CZ 🔶 Binance (@cz_binance) September 1, 2022
Did Binance Violate the Bank Secrecy Act?
In addition, the Justice Department demanded Binance to provide information on any transactions between the exchange and users involved in ransomware, terrorism and darknet marketplaces, along with those targeted by U.S. sanctions. In fact, the agency ordered the cryptocurrency exchange for all documents that identified Binance employees responsible for compliance with the Bank Secrecy Act, details of its policies to combat illegal finance, and any reports of suspicious financial activity it had filed to authorities.
The department also requested documents related to the “business rationale” for establishing Binance.US. It asked for communications involving the 13 executives and partners including Zhao, his co-founder, Yi He, and his chief compliance officer, Samuel Lim on the subject of “the creation of Binance”.
Along with the justice department, the Securities and Exchange Commission issued a subpoena to Binance’s US’s operator, BAM Trading Services, that same month. As per the subpoena, BAM was required to hand over the documents showing whether any employees also worked for the main Binance exchange and what services it was providing the U.S. company.
The Investigation is Part of a Routine Process
In reponse to the investigation, Binance Chief Communications Officer, Patrick Hillmann said that Binance has an industry leading global security and compliance team with over 500 employees, including former regulators and law enforcement agents. He added,
“Regulators across the globe are reaching out to every major crypto exchange to better understand our industry. This is a standard process for any regulated organization and we work with agencies regularly to address any questions they may have.”
In the last few years, financial regulators around the world have issued warnings about Binance, saying it was either serving users without licenses or violating anti-money laundering rules. In July, the Dutch central bank said it had fined Binance over 3 million euros for operating in breach of its financial crime laws.