The US Justice Department has recently launched an investigation into Binance Holdings Ltd., the world’s largest cryptocurrency exchange, over allegations of aiding Russians in evading US sanctions through cryptocurrency transactions. This probe, led by the Justice Department’s national security division, seeks to uncover any potential misconduct by Binance or its company officials in relation to the sanctions imposed over Russia’s invasion of Ukraine.
In its defense, Binance issued a statement to Bloomberg, stating its compliance with all US and international financial sanctions. The company emphasized its initiative in 2021, where it revamped its corporate governance structure and brought in seasoned executives to establish a significant change in its global operations.
While this investigation is underway, Binance is no stranger to regulatory scrutiny. In March, the US Commodity Futures Trading Commission (CFTC) sued both Binance and its founder, Changpeng Zhao, for allegedly offering unregistered crypto derivative products in the US. Additionally, the US Internal Revenue Service is also investigating the crypto exchange over concerns regarding adherence to Anti-Money Laundering (AML) and Know Your Customer (KYC) controls.
Zhao, also known as CZ, took to Twitter to address the CFTC allegations by tweeting “4,” which is his code for reporting on matters he disagrees with. As of now, Zhao has not addressed the Justice Department probe through Twitter or other channels.
In a preemptive move, Binance published a blog post concerning its compliance policies for preventing and combating crypto-based financing of terrorism before the news of this latest investigation broke. In the post, Binance highlighted its rigorous efforts to keep malicious actors off its platform, claiming no other exchange or financial institution does more to deter illicit activities than Binance.
As the debate around regulations and cryptocurrency grows, it raises the question of whether Binance’s compliance measures are enough to counter the risk of misuse. This ongoing scrutiny from regulatory bodies demonstrates the need for further governance measures in the burgeoning crypto sector.
While Binance’s initiatives in restructuring its corporate governance and enhancing compliance policies might show commitment towards adhering to regulations, such investigations continue to raise concerns and doubts over the platform’s ability to control unlawful activities. Consequently, it remains to be seen how these investigations will impact Binance’s operations and reputation in the long run.