Binance, the world’s largest cryptocurrency exchange, is now under investigation by the US Justice Department over potential sanctions breaches involving Russia. According to a Bloomberg report, the focus of this probe is whether the exchange or its executives have violated sanctions related to Russia’s invasion of Ukraine.
The criminal division of the Justice Department is leading the probe, while the national security team is conducting a parallel investigation. In response to the report, Binance has stated that it fully adheres to all sanctions enforcement and compliance guidelines. The exchange also emphasizes its zero-tolerance policy for double registrations, anonymous identities, and obscure sources of funds. Additionally, the exchange highlights its strict “know your customer” protocols for all customers.
This investigation follows a controversial year for Binance, facing increasing scrutiny from regulators in the US and other countries. Just recently, the CFTC announced a lawsuit against the exchange and its founder Changpeng “CZ” Zhao, alleging that it knowingly offered unregistered crypto derivative products in the US, violating the law. Furthermore, the US Internal Revenue Service and various federal prosecutors have initiated investigations over concerns about the exchange’s Anti-Money Laundering (AML) and Know Your Customer (KYC) controls.
Last week, Binance decided to terminate its $1.3 billion deal to acquire the bankrupt crypto lender Voyager Digital, citing a “hostile” US regulatory climate.
Apart from the investigations in the US, Binance is also facing scrutiny in Israel, where authorities have seized around 190 crypto accounts since 2021. A Reuters report alleges that at least two of the seized accounts were linked to ISIS, with dozens of others reportedly owned by Palestinian firms connected to the Islamist Hamas group.
Addressing its commitment to prevent and tackle crypto-based financing of terrorism, Binance published a blog post stating that it takes this issue very seriously. The exchange claims to be unaware of any other financial institution doing more to keep bad actors off their platform. Moreover, Binance highlights its team of over 750 compliance-supporting employees, many with prior law enforcement and regulatory agency backgrounds.
In conclusion, Binance is now confronted with a series of regulatory challenges, as it tries to prove its adherence to international compliance standards. While the exchange demonstrates commitment to following protocols and maintaining transparency, it will be interesting to see how these investigations evolve and what their impact will be on Binance and the cryptocurrency industry at large.