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Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539
Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539

Binance Investigated in The US: World's Biggest Crypto Exchange

Author: Syedur Rahman  21 March 2023

Syed Rahman, cryptocurrency specialist at Rahman Ravelli, outlines the situation.

The largest cryptocurrency exchange in the world, Binance, finds itself under intense scrutiny regarding its possible involvement in illegal activity.

Three United States senators have placed Binance under investigation in relation to potential sanctions evasion, money laundering and unlicensed money transmission.

In a letter to Binance’s CEO, Changpeng Zhao, and its United States subsidiary Binance US, Senators Elizabeth Warren, Chris Van Hollen and Roger Marshall stated:

"Your companies' apparent attempts at evading the enforcement of anti-money laundering laws, securities laws, information reporting requirements, and other financial regulations cast serious doubt on the stability and legitimacy of Binance and its related entities, and on your commitment to your customers."

As the world’s biggest crypto exchange by volume, Binance has 120 million users worldwide. The senators have alleged that Binance enabled criminals and rogue states to conduct money laundering and sanctions evasion worth a total of at least $10 billion.

They state that it “appears that money laundering is central to Binance's business strategy’’ and cite moves by Mr Zhao “to substantially weaken the platform's anti-money laundering controls, or do away with them completely". These moves allegedly included efforts to recruit customers in seven countries deemed extreme money laundering risks, including Russia and Ukraine.

While Binance US is registered with the Treasury Department, Binance itself is unlicensed to operate in the US. The senators accuse Binance of evading US regulators by operating Binance US as a "de facto subsidiary". According to 2019 financial documents, Binance's Cayman Islands holding company holds Binance US customers' digital wallets.

The senators’ letter notes that, since 2018, Binance has been investigated by the Department of Justice over money laundering conspiracy and criminal sanctions violations. The senators have asked Binance and its related companies to submit financial and internal documents and respond to the questions they have raised.

There is little doubt that this investigation will be of great concern to both Binance and its users. It is also likely that the entire cryptocurrency network will be anxiously waiting to see the eventual outcome.

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Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, international arbitration, civil recovery, cryptocurrency and high-stakes commercial disputes.

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