World’s biggest crypto exchange under federal investigation

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Binance faces money laundering probe by IRS and Justice Department

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17 May 2021 | 0

Binance, the world’s largest cryptocurrency exchange, is under IRS and US Department of Justice (DoJ) investigation, following allegations of money laundering and tax violations, according to reports.

Based in the Cayman Islands and Singapore, Binance is a platform for buying and selling cryptocurrencies like Bitcoin. Although the ongoing probe is confidential, Bloomberg News reports investigators are interviewing people who have insight into how Binance operates.

“The firm, like the industry it operates in, has succeeded largely outside the scope of government oversight,” Bloomberg News reported. “Chainalysis Inc., a blockchain forensics firm whose clients include US federal agencies, concluded last year that among transactions that it examined, more funds tied to criminal activity flowed through Binance than any other crypto exchange.”

 

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In response, Binance tweeted out a statement defending itself.

“We take our legal obligations very seriously and engage with regulators and law enforcement in a collaborative fashion,” the crypto exchange said. “We have worked hard to build a robust compliance program that incorporates anti-money laundering principles and tools used by financial institutions to detect and address suspicious activity.

“We have a strong track record of assisting law enforcement agencies around the world, including in the United States.”

IRS agents are investigating the conduct of Binance’s customers and its employees, according to Bloomberg. Federal investigators are looking into whether Binance has been allowing Americans to make illegal trades on its platform.

“U.S. officials have expressed concerns that cryptocurrencies are being used to conceal illegal transactions, including theft and drug deals, and that Americans who’ve made windfalls betting on the market’s meteoric rise are evading taxes,” Bloomberg reported.

For example, in the recent ransomware attack against Colonial Pipeline, responsible for fuel shortages on the East Coast, the pipeline company is said to have paid the hackers a $5 million ransom in virtually untraceable cryptocurrency.

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