The US launched a probe into the CEO of Crypto Exchange Binance
According to a Reuters report, the CEO and founder of the world’s largest crypto exchange Binance, Changpeng “CZ” Zhao, was under investigation by US federal prosecutors. Launched in 2020 by the Ministry of Justice, authorities in the country sought information about the company’s anti-money laundering activities.
Federal prosecutors asked the crypto exchange to cooperate with the investigation and asked it to hand over communications between Zhao and 12 other executives, Reuters claims. The investigation examined the platform’s mechanism to prevent illegal transactions and its operations related to US customers.
As shown below, per data shared by Zhao, Binance is the leading exchange by spot trading volume surpassing competitors such as Coinbase, FTX and others. At its peak, Binance processed over $1.5 trillion in trading volume. The business is divided into Binance and Binance.US for customers based in this country.
Reuters said the 2020 probe was reported at the time, but details remained unknown until now. The Department of Justice requested documents on Binance’s compliance with the US Bank Secrecy Act, the employees responsible for compliance, the exchange’s measures to prevent illegal financing and suspicious financial activity.
In addition, the Justice Department requested documents to understand the “business rationale” for the creation of the US Binance subsidiary. According to the Reuters report, there is no information on how the crypto exchange approached the Department of Justice, but when news of the probe broke, a spokesperson for Binance said it always cooperates with authorities.
In that sense, Binance Chief Communication Officer Patrick Hillmann said the following when talking about the probe:
Regulators worldwide are contacting all major crypto exchanges to better understand our industry. This is a standard process for any regulated organization and we regularly work with agencies to resolve any queries they may have.
Crypto Exchange Binance Under the Spotlight
Reuters claims the probe requested documents as far back as 2017 and details Binance’s structure, finances, sanctions compliance, management and more. The report claims that Binance’s corporate structure is “opaque” as the company has refused to provide information on the location of its business.
As the largest crypto exchange, Binance has attracted unwanted attention. In addition to the Justice Department investigation, the Securities and Exchange Commission (SEC) subpoenaed the company’s US subsidiary for information about its services and employees.
In 2022, the SEC launched a new investigation against the exchange’s original token Binance Coin (BNB). The commission believes the company may have breached its securities law by allegedly offering BNB as an unregistered security during its initial coin offering (ICO).
Both the actions of Binance and the US government have been questioned over the years. The company claims to make an effort to comply with the regulations. On the SEC probe, legal expert Collins Belton said:
It’s been 5 years and the market cap is higher than most US companies, why wait so long to take possible action if you’re worried about potential damage? Letting things balloon only to stab it when it’s massive seems like a recipe for causing harm to consumers rather than preventing it.
