Federal prosecutors have uncovered ties between Binance and a U.S.-based hedge fund as part of a broader investigation into the crypto exchange’s potential circumvention of money laundering guardrails, The Washington Post reports. are investigating
Leading the investigation is the U.S. Attorney’s Office for the Western District of Washington in Seattle, which has sent subpoenas to the company in recent months requesting records of its transactions with Binance, the Post said in one of the subpoenas. The report cited two people who confirmed the .
The subpoena comes as Binance, the world’s largest cryptocurrency exchange by daily trading volume, faces intense media and regulatory scrutiny over its business practices and financials. That scrutiny boiled over late last year in the wake of FTX’s multi-billion dollar implosion, shaking investor confidence in the increasingly turbulent and troubled crypto market.
The subpoena does not automatically mean that authorities will file charges against Binance or its founder and CEO Changpeng “CZ” Zhao, federal officials are still discussing a possible settlement with Binance. Post noted that they are assessing whether the evidence they have is sufficient to bring. I will charge
Over the past few years, Binance has earned a reputation for evading regulation and finding legal loopholes to maintain business operations in jurisdictions around the world, according to legal experts who spoke to the Post. According to a former DOJ prosecutor cited by the Post, the company’s previous lack of identity verification requirements has raised concerns from lawmakers about the platform’s role in money laundering. A Reuters report cited evidence that it was being used as a “hub for drug traffickers” and connected to the Russia-based dark web marketplace Hydra.
The company’s financial situation is also seen as uncertain by some. Last month, a representative for blockchain data analytics firm Nansen told CoinDesk TV’s “First Mover” that there wasn’t much on-chain. [data] or any kind of financial access or transparency [Binance’s] entity. ”
Binance has recently taken steps to increase its compliance efforts, increasing its security and compliance staff by 500% by 2022. Additionally, last fall, the company convened a Global Advisory Board chaired by former Democratic Senator from Montana, Max Borkus. Meanwhile, the exchange seems eager to improve relations with the US government and has recently been active in crypto lobbying in Washington DC.
