Crypto Exchange Binance Faces US Money Laundering Investigation

This turns out to be another duly eventful year for crypto. In the space of five months, same money Dogecoin saw prices skyrocket, Pay Pal opened cryptocurrency trading and Tesla made a turn around at Bitcoin payments. Adding to the volatility, conflicting reports claim that the world’s largest cryptocurrency exchange, Binance, is under investigation by the US Department of Justice and the Internal Revenue Service (IRS) .

According to Bloomberg, officials interested in how cryptography is used for money laundering sought information from people familiar with Binance transactions. However, the publication did not confirm whether the inquiries were linked to criminal offenses, saying not all inquiries stemmed from “allegations of wrongdoing.”

Binance CEO Changpeng Zhao was quick to explain his side of the story. Without explicitly naming the article, he tweeted that the “news” painted his business in a negative light. According to Zhao, Binance had “collaborated with law enforcement to fight bad players,” adding that history made it “sound like a bad thing.”

However, the point is that the cryptocurrency exchange – which is banned from operating in the United States – has been accused of money laundering for some time now. A recent report from the blockchain forensics firm Chainalysis said Binance was a top destination for illicit cryptocurrency in 2019.

Regulators are also looking into whether Binance has allowed Americans to trade illegally, sources said. Bloomberg. Doing business in the United States is prohibited because it offers securities that are not registered with the Commodity Futures Trading Commission. Although the company has repeatedly denied the allegations, crypto news sites said its restrictions on Americans can easily be bypassed. Bloomberg adds that Binance had also advised Americans to use a VPN to hide their location when seeking access to its exchange.

The company’s entanglement with federal law enforcement comes amid growing regulatory scrutiny of cryptocurrencies. U.S. officials worried about the lack of oversight of digital assets fear they may be used to cover up illegal transactions, including drug deals. Meanwhile, the IRS has would have expands its ability to track people who owe taxes based on cryptocurrency investments. If you ask the experts, they will tell you that lawmakers face the eternal dilemma of catching up with technological innovation.

Binance was founded in China, but was forced out of the country following a crypto trading ban in 2017. It is now incorporated in the Cayman Islands, according to Bloomberg, a notorious tax haven used by businesses and the wealthy to hide their finances.

Yesterday, the company posted a statement on Twitter asserting its compliance with U.S. laws. “We take our legal obligations very seriously and work with regulators and law enforcement,” Binance said. “We have worked hard to put in place a robust compliance program that incorporates anti-money laundering principles and the tools used by financial institutions to detect and deal with suspicious activity.”

The company continued, “We have a solid track record of assisting law enforcement around the world, including the United States.”

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