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Syed Rahman, cryptocurrency specialist at Rahman Ravelli,
outlines the situation.
The largest cryptocurrency exchange in the world, Binance,
finds itself under intense scrutiny regarding its possible
involvement in illegal activity.
Three United States senators have placed Binance under
investigation in relation to potential sanctions evasion, money
laundering and unlicensed money transmission.
In a letter to Binance’s CEO, Changpeng Zhao, and its United
States subsidiary Binance US, Senators Elizabeth Warren, Chris Van
Hollen and Roger Marshall stated:
“Your companies’ apparent attempts at evading the
enforcement of anti-money laundering laws, securities laws,
information reporting requirements, and other financial regulations
cast serious doubt on the stability and legitimacy of Binance and
its related entities, and on your commitment to your
As the world’s biggest crypto exchange by volume, Binance
has 120 million users worldwide. The senators have alleged that
Binance enabled criminals and rogue states to conduct money
laundering and sanctions evasion worth a total of at least
They state that it “appears that money laundering is
central to Binance’s business strategy” and cite moves
by Mr Zhao “to substantially weaken the platform’s
anti-money laundering controls, or do away with them
completely”. These moves allegedly included efforts to recruit
customers in seven countries deemed extreme money laundering risks,
including Russia and Ukraine.
While Binance US is registered with the Treasury Department,
Binance itself is unlicensed to operate in the US. The senators
accuse Binance of evading US regulators by operating Binance US as
a “de facto subsidiary”. According to 2019 financial
documents, Binance’s Cayman Islands holding company holds
Binance US customers’ digital wallets.
The senators’ letter notes that, since 2018, Binance has
been investigated by the Department of Justice over money laundering conspiracy and criminal
sanctions violations. The senators have asked Binance and its
related companies to submit financial and internal documents and
respond to the questions they have raised.
There is little doubt that this investigation will be of great
concern to both Binance and its users. It is also likely that the
entire cryptocurrency network will be anxiously waiting to see the
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