Report: Feds Investigate Binance Over Bank Secrecy Violations

Binance CEO: CBDCs 'Very Positive' for Industry

Federal authorities are investigating whether cryptocurrency exchange Binance violated the Bank Secrecy Act.

That’s according to a Thursday (Sept. 1) Reuters report, which noted that the Department of Justice (DOJ) in 2020 asked Binance for extensive internal records about its anti-money laundering (AML) measures, as well as communications involving Founder and CEO Changpeng Zhao.

Read more: Binance’s Rebooted Compliance Team Looks to Burnish Bruised AML Reputation

The DOJ’s money laundering section asked Binance — the world’s largest crypto exchange — to voluntarily turn over messages from Zhao and a dozen other people on issues that included the company’s detection of unlawful transactions, the report stated.

In addition, prosecutors asked for company records with instructions that “documents be destroyed, altered or removed from Binance’s files” or “transferred from the United States,” according to the report.

The December 2020 request was part of an ongoing DOJ investigation into Binance’s compliance with U.S. financial crime laws, the report stated.

“As has been well documented, regulators across the globe are reaching out to every major crypto exchange to better understand our industry,” Binance said in a statement to PYMNTS. “We work with agencies regularly to address any outstanding questions. Binance has an industry leading global security and compliance team which boasts more than 500 employees across the globe. Our team includes professionals with backgrounds as regulators, senior investigators from distinguished blockchain analysis firms, and law enforcement agents who have led some of the largest investigations into cybercrimes.”

The Bank Secrecy Act requires crypto exchanges to register with the Department of the Treasury and adhere to AML rules if they conduct “substantial” business in the U.S., according to the report. Violations of the law carry prison terms of as many as 10 years.

Binance was one of five crypto firms approached earlier this week by Rep. Raja Krishnamoorthi in his quest to learn how regulators and crypto companies deal with crypto fraud.

See more: US Rep Asks Regulators, Crypto Firms How They Deal With Fraud

“The lack of a central authority to flag suspicious transactions in many situations, the irreversibility of transactions, and the limited understanding many consumers and investors have of the underlying technology make cryptocurrency a preferred transaction method for scammers,” said Krishnamoorthi, who chairs the House Subcommittee on Economic and Consumer Policy.

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