Binance Under Investigation Over Bank Secrecy Act: Report

The Justice Department started probing Binance on its policies to combat illegal finance in 2020, sources told Reuters

article-image

Binance’s Changpeng Zhao

share

key takeaways

  • The Bank Secrecy Act is mostly concerned with anti-money laundering controls
  • “We work with agencies regularly to address any outstanding questions,” Binance spokesperson said

US authorities have an ongoing investigation into whether Binance violated the Bank Secrecy Act, Reuters reported Thursday, after federal prosecutors began probing the company and its CEO in December 2020.

The Justice Department’s money laundering unit asked the world’s largest crypto exchange nearly two years ago to hand over messages from CEO Changpeng Zhao and other executives on matters including its detection of illegal transactions and US customer recruitment, according to the report. 

The 2020 letter reportedly made nearly 30 requests for documents that included details of Binance’s policies to combat illegal finance, or reports of suspicious financial activity it had filed to authorities, among other matters.

The Bank Secrecy Act, passed in 1970, established program, recordkeeping and reporting requirements for national banks, federal savings associations, federal branches and agencies of foreign banks, particularly around combating money laundering. 

Crypto exchanges fall under the scope of the Bank Secrecy Act too. Though Binance.US registered with the US Treasury Department in 2019, Binance’s flagship platform did not, according to Reuters.

A Binance spokesperson told Blockworks in an email that the company has a global security and compliance team with more than 500 people, including former regulators and law enforcement agents.

​​”As has been well documented, regulators across the globe are reaching out to every major crypto exchange to better understand our industry,” the representative added. “We work with agencies regularly to address any outstanding questions.”

The spokesperson did not comment on whether it is being investigated for violating the Bank Secrecy Act.

Crypto exchange execs already stung by Bank Secrecy Act

While Binance is reportedly deals with its own Bank Secrecy Act investigation, prominent executives at crypto derivatives exchange BitMEX have already been sentenced for violations.

BitMEX co-founders Arthur Hayes and Ben Delo pleaded guilty in February. As part of the plea agreement, the pair was ordered to pay $10 million each for their involvement in “willfully failing” to implement and maintain anti-money laundering measures at BitMEX.

Another co-founder, Samuel Reed, pleaded guilty to the same count the following month and also agreed to pay $10 million. Earlier this month, BitMEX’s head of business development Gregory Dwyer pleaded guilty to violating the Bank Secrecy Act in a similar manner. He agreed to pay a $150,000 fine and faces up to five years in prison. 

Hayes was sentenced to six months of house arrest followed by two years of probation; Delo received 30 months probation; and Reed was sentenced to 18 months probation.  

Regulation by enforcement will continue in the absence of concrete crypto legal frameworks, industry executives and lawyers have told Blockworks.

The Reuters report came two days after US Rep. Raja Krishnamoorthi, D-Ill., sent letters to four federal agencies and five crypto exchanges — including Binance — requesting information on their mechanisms to tackle fraud and scams.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Top Icon.png

Research

Osmosis thrived in H2 2023 on the back of increased DeFi activity deriving from recently launched Cosmos-related projects and better market conditions. With new value accrual mechanisms for the native token, Osmosis is well-positioned to continue its strong performance in 2024.

/

article-image

Though the opposing flow trend is likely to slow over time, industry watchers note, bitcoin fund assets could one day eclipse the $90 billion gold ETF space

article-image

Celestia had the first mover advantage. EigenDA has staked ether. What sets Avail apart?

article-image

Bitcoin moved 1% higher Monday morning in New York, Matrixport analysts say $62,000 could happen next month

article-image

It’s hard to believe right now that crypto — even with all of its flexibility and massive capabilities — could ever be like cash on the internet

article-image

Michael Saylor announced Monday morning that MicroStrategy bought 3k more bitcoin after the X account was compromised over the weekend

article-image

Plus, Pudgy Penguins grows its brand and a group of Autoglyphs sell for $14.5 million