The United States Department of Justice (DOJ) has reportedly launched an investigation into Binance Holdings Ltd., the world’s largest cryptocurrency exchange, for potential violation of sanctions imposed on Russia. According to sources, the DOJ’s national security division is looking into whether Binance was used to allow Russians to evade U.S. sanctions and move money through the crypto platform.
The probe comes amid growing tensions between the U.S. and Russia following the invasion of Ukraine. Binance officials are under scrutiny as part of an ongoing investigation into the company’s conduct. While the DOJ declined to comment on the matter, Binance told Bloomberg that it was in full compliance with all U.S. and international financial sanctions.
The exchange added that it has enforced industry-leading know your customer (KYC) protocols, in addition to a zero-tolerance policy for double registrations, anonymous identities, and obscure sources of money. In 2021, Binance launched an initiative to completely overhaul its corporate governance structure, including bringing in a world-class bench of seasoned executives to fundamentally change how Binance operates globally.
However, a person close to the investigation revealed that as of now, there is no indication that the DOJ is preparing to agree to a settlement with the crypto exchange. Not all probes lead to the filing of formal charges.
This latest development comes on the heels of another report by Reuters, which claimed that Binance was entertaining accounts with links to terrorist organizations, including the Islamic State. The report also alleged that Binance failed to promptly freeze accounts linked to ransomware attacks, despite claiming to have zero-tolerance for such activities.
Binance has denied these allegations, stating that it maintains a robust compliance program and works closely with law enforcement agencies to combat illicit activities. The exchange also pointed out that it has a team dedicated to monitoring and investigating suspicious activity on its platform.
The investigation is likely to have significant implications for Binance, which has already been facing regulatory scrutiny in several countries, including the U.K., Japan, and Germany. The exchange has been forced to scale back its operations in some of these countries, and its CEO, Changpeng Zhao, has warned that more regulatory action could be on the horizon.
The DOJ’s probe into Binance is also likely to have broader implications for the cryptocurrency industry as a whole. Regulators around the world have been grappling with how to regulate cryptocurrencies, which are often used by criminals to launder money and finance illicit activities.
The outcome of the investigation could set a precedent for how other crypto exchanges are regulated in the future. If Binance is found to have violated U.S. sanctions, it could face significant fines and legal action, which could further erode confidence in the crypto industry.
