Binance Faces Probe by U.S. Money-Laundering and Tax Sleuths

Binance Faces Probe by U.S. Money-Laundering and Tax Sleuths
How To
19:15, 13 May 2021
59
4 641
0
Binance Holdings Ltd. is under investigation by the Justice Department and Internal Revenue Service, ensnaring the world’s biggest cryptocurrency exchange in U.S. efforts to root out illicit activity that’s thrived in the red-hot but mostly unregulated market.

As part of the inquiry, officials who probe money laundering and tax offenses have sought information from individuals with insight into Binance’s business, according to people with knowledge of the matter who asked not to be named because the probe is confidential. Led by Changpeng Zhao, a charismatic tech executive who relishes promoting tokens on Twitter and in media interviews, Binance has leap-frogged rivals since he co-founded it in 2017.

The firm, like the industry it operates in, has succeeded largely outside the scope of government oversight. Binance is incorporated in the Cayman Islands and has an office in Singapore but says it lacks a single corporate headquarters. Chainalysis Inc., a blockchain forensics firm whose clients include U.S. federal agencies, concluded last year that among transactions that it examined, more funds tied to criminal activity flowed through Binance than any other crypto exchange.

"We take our legal obligations very seriously and engage with regulators and law enforcement in a collaborative fashion," Binance spokeswoman Jessica Jung said in an emailed statement, while adding that the company doesn’t comment on specific matters or inquiries.

"We have worked hard to build a robust compliance program that incorporates anti-money laundering principles and tools used by financial institutions to detect and address suspicious activity."

Spokespeople for the Justice Department and IRS declined to comment.

U.S. Concerns

U.S. officials have expressed concerns that cryptocurrencies are being used to conceal illegal transactions, including theft and drug deals, and that Americans who’ve made windfalls betting on the market’s meteoric rise are evading taxes. Such worries have been a hindrance to the industry going mainstream, even as Wall Street increasingly embraces Bitcoin and other tokens amid a global investing frenzy.

This month’s cyber-attack against Colonial Pipeline Co. that’s triggered fuel shortages across the Eastern U.S. is the latest sign of what’s at stake. Colonial paid Eastern European hackers a nearly $5 million ransom in untraceable cryptocurrency within hours of the breach, Bloomberg News reported Thursday, citing two people familiar with the matter.

Bitcoin losses accelerated Thursday after Bloomberg reported the investigation into Binance.

While the Justice Department and IRS probe potential criminal violations, the specifics of what the agencies are examining couldn’t be determined, and not all inquiries lead to allegations of wrongdoing.

The officials involved include prosecutors within the Justice Department’s bank integrity unit, which probes complex cases targeting financial firms, and investigators from the U.S. Attorney’s Office in Seattle. The scrutiny by IRS agents goes back months, with their questions signaling that they’re reviewing both the conduct of Binance’s customers and its employees, another person said.

The U.S. Commodity Futures Trading Commission has also been investigating Binance over whether it permitted Americans to make illegal trades, Bloomberg reported in March. In that case, authorities have been examining whether Binance let investors buy derivatives that are linked to digital tokens. U.S. residents are barred from purchasing such products unless the firms offering them are registered with the CFTC.

Analyzing Transactions

Zhao has said Binance closely follows U.S. rules, blocks Americans from its website, and uses advanced technology to analyze transactions for signs of money laundering and other illicit activity. Last year, the firm warned that U.S. residents would have their accounts frozen if they were found to be trading, crypto trade publications have reported.

The inquiries follow a Chainalysis report on criminal transactions involving digital tokens. The firm tracked Bitcoin worth $2.8 billion that it suspects crooks moved on to trading platforms in 2019. Chainalysis determined that roughly 27%, or $756 million, wound up on Binance. Binance responded by saying it adheres to all anti-money laundering regulations in the jurisdictions in which it operates and works with partners like Chainalysis to improve its systems.

In the U.S., authorities have been cracking down on exchanges for flouting laws that are meant to prevent financial crimes, with officials citing the platforms use by terrorists and hackers. Tax violations have also been a priority, with the government recently winning a court order as it seeks to unmask U.S. clients of Kraken, a San Francisco-based exchange.

In October, federal prosecutors in Manhattan announced charges against the founders of Seychelles-based BitMEX, accusing them of violating the Bank Secrecy Act by permitting thousands of U.S. customers to trade while publicly claiming to restrict their access. The claims included failing to register as a futures merchant with the CFTC and not having adequate anti-money laundering controls. Three of the BitMex officials pleaded not guilty and a trial has been scheduled for March 2022. One remains at large.

Washington Presence

With the U.S. circling, Binance has stepped up its presence in Washington and retained a former Treasury Department official and top white-collar defense lawyers to represent it in legal cases and matters being reviewed by regulators. In March, the firm tapped former U.S. Senator Max Baucus, a Montana Democrat, to advise it on policy and government relations.

In September 2019, Binance partnered with a firm called BAM Trading Services Inc., which launched Binance.US to cater to American clients. Brian Brooks, who was a top banking regulator when he led the Office of the Comptroller of the Currency during the Trump administration, became chief executive officer of Binance.US this month.

Amid the hiring blitz, the company has popped up in U.S. cases tied to criminal activity. In February, two Florida men were charged with running an online fentanyl trafficking operation, with one of them accused of depositing the proceeds in a Binance account. That same month, the Justice Department sought the forfeiture of cryptocurrency worth $450,000 traced from ransomware attacks that hit several U.S. companies to a Binance account held by a 20-year-old Ukrainian national. The government didn’t accuse Binance of wrongdoing in either enforcement action.

Disguising Locations

Along with the CFTC, the Justice Department is likely to examine steps that Binance has taken to keep U.S. residents off its exchange. One person familiar with Binance’s operations said that prior to the establishment of Binance.US, Americans were advised to use a virtual proxy network, or VPN, to disguise their locations when seeking to access the exchange.

Jung, the Binance spokeswoman, said the exchange has never encouraged U.S. residents to use VPNs to get around its rules, as doing so would be something “that has always been contrary to our company’s principles.” In January, Zhao tweeted that Binance’s security systems block Americans even if they try to connect through one of the networks.

"We have implemented strong access controls that have been tested via external audit and are under continuous review and evaluation by Binance to ensure that the appropriate restrictions are in place and are effective," Jung said.

(Updates with Bitcoin falling in eighth paragraph)
 Ctrl 
Enter
Noticed a bug
Highlight text and press Ctrl+Enter
Comments (0)
Top in category
Guide Mod BIOS Mainboard ASUS H110M-K/D/CS/E/E.M2, B150M-K, H270-PLUS, Z170-PRO,.. running Intel CoffeeLake CPUGuide Mod BIOS Mainboard ASUS H110M-K/D/CS/E/E.M2, B150M-K, H270-PLUS, Z170-PRO,.. running Intel CoffeeLake CPU
The processors that are tested with stable operation include: i3-9100F, i3-8350K, i3-8300, i3-8100T, G4900T, G5500T, G4900, G4920, G5500 and G5400T..
10-03-2020, 18:47
142 887
5
Request your Mod BIOS Mainboard SkyLake, KabyLake running Intel CoffeeLake CPURequest your Mod BIOS Mainboard SkyLake, KabyLake running Intel CoffeeLake CPU
Please view this article to know how to update Mod BIOS for yoru mainboard before request your bios mainboard. Your Mod BIOS will be upload and post here as..
01-03-2020, 11:07
31 476
2
Site UG Viet Nam Open Reg Nick - Sell Nick Diễn Đàn UG Viet Nam 2021Site UG Viet Nam Open Reg Nick - Sell Nick Diễn Đàn UG Viet Nam 2021
Có 1 cách kiếm tiền Online vô cùng lợi hại, ko phải gõ capcha, ko phải ptc mà cũng ko cần làm offer... Đó chính là UG, vậy UG là gì !? Vì sao nó lợi hại!?..
01-03-2020, 10:28
21 504
0
Hướng dẫn cài đặt Microsoft Store cho Windows 10 EnterpriseHướng dẫn cài đặt Microsoft Store cho Windows 10 Enterprise
Windows 10 Enterprise LTSB 2016 / LTSC 2019 mặc định sẽ không có Store và các ứng dụng đi kèm bởi vì phiên bản này phục vụ cho doanh nghiệp. Bài viết này mình..
04-12-2020, 16:11
5 087
0
Hướng dẫn xóa 100% Vietnamese Keyboard trong máy tính Windows 10Hướng dẫn xóa 100% Vietnamese Keyboard trong máy tính Windows 10
Trong bài viết này, mình sẽ hướng dẫn các bạn cách xóa Vietnamese Keyboard Win 10 khi không sử dụng đến và loại bỏ những rắc rối của nó. Ngoài ra, mình cũng sẽ..
11-10-2020, 20:15
5 050
0
Hướng dẫn cách lấy mũi taro bị gãy khi đang gia côngHướng dẫn cách lấy mũi taro bị gãy khi đang gia công
Ngành cơ khí ngày càng được nhà nước quan tâm, hàng năm số doanh nghiệp được thành lập trong ngành cơ khí lên tới hàng chục nghìn. Với một thị trường rộng lớn..
24-03-2021, 13:45
5 003
0
Hướng dẫn cách cài đặt mới Windows 10 bằng USBHướng dẫn cách cài đặt mới Windows 10 bằng USB
Trong bài viết này, mình muốn chia sẻ đến các bạn cách cài đặt Windows 10 từ USB đầy đủ nhất, đây là cách khá phổ biến mà bạn nên biết bởi nó sẽ giúp bạn tiết..
03-12-2020, 20:05
4 917
0
Hướng Dẫn Cài Đặt Phần Mềm RepackHướng Dẫn Cài Đặt Phần Mềm Repack
Repack là dạng phần mềm được đóng gói lại với crack sẵn do các cracker đến từ Nga thực hiện. Người dùng chỉ cần tải xuống cài đặt và sử dụng bình thường với..
21-08-2021, 18:05
4 866
0