(Kitco News) - Binance, the world’s largest and most active cryptocurrency exchange, is under investigation for possible violations of the Bank Secrecy Act, according to a report posted by Reuters on Thursday.
The investigation came to light after it was revealed that in December 2020, U.S. federal prosecutors asked Binance to provide internal records related to anti-money laundering checks as well as all communications involving Binance’s founder and CEO Changpeng Zhao (CZ).
The Justice Department’s money laundering division also asked for the voluntary release of messages from 12 other executives and partners that relate to several topics, including the exchange's detection of illegal transactions and recruitment of U.S. customers.
Any company records with instructions that “documents be destroyed, altered, or removed from Binance's files” or “transferred from the United States” were also requested.
This is the first time the DOJ request has been publicly disclosed in-depth, and sources familiar with the matter say that the investigation into Binance's compliance with U.S. financial crime laws remains ongoing.
The main point of focus is to determine whether Binance violated the Bank Secrecy Act, which “requires crypto exchanges to register with the Treasury Department and comply with anti-money laundering requirements if they conduct "substantial" business in the United States,” according to Reuters.
Twenty-nine separate requests were included in the original letter, asking for documents dated as far back as 2017 on issues ranging from the company's management, structure, finances, anti-money laundering and sanctions compliance, and business in the United States.
"Binance is requested to produce all documents and materials that are responsive to this letter in its possession, custody, or control," the letter said.
It is currently unknown how Binance and CZ responded to the request.
|
| NFTs and some stablecoins are excluded from FASB’s crypto accounting review |
When inquiries were made regarding the investigation, Binance Chief Communications Officer Patrick Hillmann said, “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.”
Hillmann added that Binance has an “industry leading global security and compliance team” with more than 500 employees, including former regulators and law enforcement agents.
This latest revelation follows Tuesday’s announcement that the House Committee on Oversight and Reform sent letters to five crypto exchanges and four government agencies requesting any information and documents about what steps are being taken, if any, to safeguard consumers against scams and instances of cryptocurrency-related fraud.
Binance.US was included in the list of recipients, along with Coinbase, FTX, Kraken and KuCoin. The committee has requested documents dated as far back as Jan. 1, 2009, that detail their efforts to combat crypto scams and fraud.
