Splits between U.S. Department of Justice prosecutors are delaying the conclusion of a long-running criminal investigation into the world’s largest cryptocurrency exchange, Binance. The ongoing probe has had investors on edge as they wait for a resolution to the uncertainty surrounding the platform’s legal status.
In 2018, the U.S. Department of Justice began investigating Binance for alleged non-compliance with anti-money laundering laws and sanctions. While some federal prosecutors believe that enough evidence has already been collected to justify taking aggressive action against the exchange and filing criminal charges against individuals, including founder Changpeng Zhao, others have advocated for further investigation into the case before moving forward.
To pursue money laundering charges against Binance, the Money Laundering and Asset Recovery Section Chief at the Justice Department must first approve the charges. The U.S. Attorney’s Office for the Western District of Washington in Seattle, the National Cryptocurrency Enforcement Team, and higher-level DOJ officials will likely need to sign off on any action against Binance.
According to Reuters’ interviews and records review, an unprecedented look into the U.S. investigation into Binance has been achieved. This includes insights from former and current law enforcement officials and ex-Binance advisors, as well as information regarding how the investigation has unfolded and what measures Binance has taken to avoid potential charges.
Binance is facing intense scrutiny from the U.S. Justice Department, and its lawyers are scrambling to avoid criminal prosecution for their client. Gibson Dunn, the law firm representing Binance, has been meeting with Justice Department officials to make the case that any criminal charges against Binance or its CEO Zhao would further destabilize an already troubled crypto sector. The meetings have even included discussing possible plea deals, indicating how seriously Binance and its representatives are taking the situation.
In response to the reported investigation by the US Justice Department into unlicensed money transmission, money laundering conspiracy, and criminal sanctions violations, a spokesperson from Binance stated that they do not have any insight into the department’s inner workings and that it would be inappropriate for them to comment. The Justice Department declined to comment on the matter. It remains to be seen whether indictments will be brought against Binance and its executives, if a settlement will be negotiated, or if the case will be closed without any action.
Zhao’s response to the looming investigation was twofold: he took measures to keep the company operations discreet, such as enforcing strict secrecy rules on employees and instructing them to communicate using encrypted messaging services and accelerated growth worldwide. These steps ultimately led to Binance becoming one of the largest crypto exchanges in the world over the last five years – despite the investigations into its practices.
Reuters recently revealed that despite Binance’s efforts to drive higher industry standards, the exchange has been found to have weak anti-money laundering controls, processing over $10 billion in payments for criminals and companies seeking to evade U.S. sanctions and attempting to avoid regulators in the United States and elsewhere. Despite Binance’s objections that Reuters’ figures are inaccurate and their descriptions of its compliance controls are outdated, these allegations have significantly impacted its reputation.
Since its launch in 2017 by Zhao in Shanghai, Binance has quickly become a leader in the crypto industry. According to CryptoCompare, the exchange handled a whopping $1.6 trillion worth of trades in October 2020 – about half of the entire crypto market’s trading volume that month! This dwarfs their closest competitor FTX which only processed $230 billion.
The Justice Department has opened an investigation into FTX’s handling of company funds following its implosion in early November. Sources have revealed that it is still being determined if the new probe will expedite or slow down the investigation into Binance. Founder Sam Bankman-Fried insists he did not knowingly commit any wrongdoing. However, attorneys for FTX have alleged the exchange was run as a personal fiefdom of Bankman-Fried. The public has called for greater regulation of the cryptocurrency industry in light of these events.
In a decisive move to protect the reputation of the cryptocurrency industry, Zhao, the founder of Binance, took swift action against rival exchange FTX by announcing they would sell their holding of its digital token. This sparked a surge of user withdrawals and ultimately caused FTX to file for bankruptcy.
Marine Corps Veteran-turned-national-tv-personality Eric Mitchell is a world leading expert in sports media, regularly appearing on the world’s largest outlets from BBC, MSNBC, Fox News, Bloomberg, CNN and more. His signature blend of snark and industry expertise landed him columns at none other than RollingStone, GritDaily, PopWrapped, Disrupt — and most recently — Editor in Chief at NFT Today Magazine. When he’s not making media appearances or running his empire at LifeFlip Media, he can be found entertaining his thousands of loyal followers on social media through his authentic filter-free content.