The investigation by blockchain forensics firm Chainaysis inc. determined that criminal activity with funds transacted with Binance exceeded that of other cryptocurrency exchanges, and that Chainaysis’ clients included U.S. federal agencies.
Binance response: We take our legal obligations very seriously and are willing to work in a collaborative manner with regulators and law enforcement. We have worked hard to establish a robust compliance program, including anti-money laundering systems and tools for financial institutions to detect and address suspected criminal activity. We have a proven track record of assisting law enforcement agencies around the world, including the United States.
On the news, Binance platform coin BNB plunged instantly to $526.6 per coin, down more than 15 percent in 24 hours.
As part of a reconnaissance operation, officials investigating money laundering and tax evasion interviewed individuals with inside knowledge of Binance’s business, Bloomberg said, citing anonymous sources familiar with the matter. Zhao Changpeng also frequently promotes cryptocurrencies in tweets and media interviews.
Binance, like the industry it operates in, is largely outside the scope of government regulation. The company is registered in the Cayman Islands and has an office in Singapore, but claims to have no fixed corporate headquarters. Blockchain forensics firm Chainaysis inc. determined last year that Binance was chosen to transact the majority of the money associated with criminal activity in the transactions it examined, more than any other cryptocurrency exchange.
“We take seriously our legal obligations and cooperate with regulators and law enforcement,” said Jessica Jung, a spokeswoman for Cryptocurrency, in an emailed statement. and said the company has been working to build a robust compliance program that combines anti-money laundering principles with the tools financial institutions use to detect and address suspicious activity. She added that the company does not comment on specific matters or queries.
U.S. officials are concerned that cryptocurrencies are being used to conceal illegal transactions including theft and drug dealing, and that a growing number of Americans are engaging in cryptocurrency transactions but evading taxes. While a growing number of global investors, including Wall Street investment houses, are embracing terracurrency and cryptocurrencies, such concerns have become a barrier to the industry joining mainstream investments.
The U.S. Department of Justice and the IRS are investigating Binance, but it is impossible to determine the specifics of the matters the agencies are investigating at this time, and not all inquiries will result in charges of illegal conduct. Spokespeople for the Justice Department and the IRS declined to comment.
Officials involved in the investigation include prosecutors from the Justice Department’s bank integrity division, which investigates complex cases against financial companies, and investigators from the U.S. attorney’s office in Seattle. The DNR’s review goes back several months, as they examine the conduct of Binance customers and employees.
Bloomberg reported in March that the U.S. Commodity Futures Commission had been investigating whether Cryptocurrency had allowed U.S. persons to make illegal transactions. Authorities have been investigating whether Cryptocurrency has allowed U.S. investors to buy derivatives related to cryptocurrencies, and U.S. residents are not allowed to buy such products unless they are registered with the CFTC.
Zhao Changpeng has said that Binance follows U.S. laws and regulations that prohibit Americans from accessing its website and uses advanced technology to screen trading centers for money laundering and other illegal criminal activity. The company said last year that if U.S. residents were found to be trading, their accounts would be frozen.
The investigation follows the release of a report by Chainalysis on criminal transactions involving cryptocurrencies. The firm tracked $2.8 billion worth of bitcoin that it suspected scammers transferred to the trading platform in 2019. chainalysis determined that about 27 percent ($756 million) of the funds flowed into Binance. binance responded that it complies with all anti-money laundering regulations in its jurisdiction and is working with chainalysis to improve its anti-money laundering system.
In the United States, authorities have been cracking down on exchanges that violate laws to prevent financial crimes. At the same time, investigating criminal violations of tax policies is also a priority, and the U.S. government recently issued a statement requesting the disclosure of personal information of U.S. customers of San Francisco-based exchange Kraken.
With the involvement of the relevant U.S. agencies, Binance has stepped up the scope and intensity of its activities in the U.S., including, hiring a former Treasury Department official and top defense attorney to represent Binance in legal cases and matters under review by regulators. In March, the firm hired former Montana Democratic Senator Max Baucus to advise it on policy and government relations.
To cater to U.S. customers, on Sept. 20, 2019, Binance launched Binance.US in partnership with BAM Trading Services Inc. Brian Brooks, who became chief executive of Binance and who led the Office of the Comptroller of the Currency in the Trump administration (Office of The Comptroller of the Currency).
In February, two Florida men were charged with fentanyl trafficking online, and one of them was accused of depositing the proceeds into a Cryptocurrency account, allowing Binance to appear in the U.S. in a suspected criminal money laundering case. That same month, the U.S. Department of Justice sought the forfeiture of $450,000 worth of cryptocurrency after a 20-year-old Ukrainian used a software attack to blackmail and soften several U.S. companies. However, the U.S. government has not charged Binance with misconduct in any enforcement action.
The U.S. Department of Justice, along with the U.S. Commodity Futures Trading Commission, may review measures taken by Binance to prevent U.S. residents from accessing its exchange. A person familiar with Binance’s operations said that before Binance.US was formed, Americans could use a virtual proxy network (VPN) to disguise their location in an attempt to access the exchange.
Binance spokeswoman Jessica Jung said the exchange never encouraged U.S. residents to use VPNs to bypass regulations because doing so “has always been against our company’s principles. In January, Zhao Changpeng tweeted that Binance’s security systems would block even attempts by Americans to connect via VPN, Jessica Jung said: “We have implemented strong access restriction controls that have been externally audited and tested, and are continuously reviewed and evaluated by Binance to ensure that restrictions are in place and effective.”
Following reports of the Binance investigation, the cryptocurrency market fluctuated dramatically, with Bitcoin falling below $48,000 before slowly recovering to $5,000 and Ether falling below $3,600 at one point. coinbase was also dragged down, with shares overshooting by 10 percent to a new daily low of $252.26, with investment bank BTIG analyst Mark Palmer arguing that Investors misinterpreted media reports about the Coin On exchange being investigated by the U.S. Department of Justice and others, which in turn led to a sell-off in Coinbase stock.
The inclusion of Binance, the world’s largest cryptocurrency exchange, in the scope of the U.S. enforcement action could be the start of a new round by U.S. regulators to root out rampant illegal activity in the hot but largely lawless cryptocurrency market.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/binance-faces-u-s-department-of-justice-and-irs-investigation-for-money-laundering-and-tax-evasion/
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