- U.S. government is looking into whether Binance broke the Bank Secrecy Act.
- Crypto exchanges that do “substantial” business in the US must register with the Treasury Department and follow anti-money laundering rules.
In a written request from late 2020 that Reuters saw, U.S. federal prosecutors asked Binance, the world’s largest cryptocurrency exchange, to give them a lot of information about its anti-money laundering checks and communications with its CEO and founder, Changpeng Zhao.
The money laundering section of the Justice Department asked Binance to turn over messages from Zhao and 12 other executives and partners. These messages were about things like how the exchange found illegal transactions and how it found U.S. customers. It also asked for any company records that said “documents should be destroyed, changed, or taken out of Binance’s files” or “should be moved out of the United States.”
The December 2020 request, which had not been made public before, was part of an ongoing Justice Department investigation into whether Binance is following U.S. financial crime laws, according to four people with knowledge of the investigation.
People say that the US government is looking into whether Binance broke the Bank Secrecy Act. This means that crypto exchanges that do “substantial” business in the US must register with the Treasury Department and follow anti-money laundering rules. The law, which is meant to keep illegal money out of the U.S. financial system, can lead to jail time of up to 10 years.
Reuters couldn’t figure out how Binance and Zhao, one of the most well-known people in the crypto industry, responded to the request from the criminal division of the department.
When Reuters asked Binance’s Chief Communications Officer, Patrick Hillmann, about the letter and the investigation, he said, “All over the world, regulators are reaching out to the biggest crypto exchanges to learn more about our industry. This is a normal step for any organisation that is regulated, and we work with agencies often to answer any questions they might have.” Hillmann also said that Binance has “an industry-leading global security and compliance team” with more than 500 workers, some of whom are former regulators and law enforcement officers.
He did not say what Binance did in response to the request from the Justice Department. A Department spokesperson didn’t want to say anything.