It’s going to be another busy year for Crypto. Within five months, the dogecoin meme currency has seen its price spike, PayPal has started trading in cryptocurrencies, and Tesla has made an U-turn in Bitcoin payments. In addition to volatility, conflicting reports claim that the world’s largest cryptocurrency exchange, Binance, is under investigation by the U.S. Department of Justice and the Internal Revenue Service (IRS).
According to Bloomberg, officials interested in how crypto is used for money laundering sought information from those familiar with Binance’s business. However, the publication did not confirm whether the investigation was linked to criminal offenses, claiming that not all investigations were due to “allegations of wrongdoing”.
Changpeng Zhao, Binance CEO, was quick to grapple with his side of the story. Without explicitly naming the article, he tweeted that the “news” cast his company in a negative light. Zhao said Binance “worked with law enforcement to tackle bad players,” adding that the story “made the story look like a bad thing”.
However, the fact is that the cryptocurrency exchange, the operation of which is banned in the US, has been raising money laundering allegations for some time. A recent report by blockchain forensics firm Chainalysis said Binance was a top target for illicit cryptocurrency in 2019.
Regulators are also investigating whether Binance has allowed Americans to do illegal business, sources told Bloomberg. It is prohibited to do business in the United States as it offers securities that are not registered with the Commodity Futures Trading Commission. Although the company has repeatedly denied the claims, crypto news sites have stated that the restrictions are easy to bypass for Americans. Bloomberg adds that Binance previously recommended Americans use a VPN to hide their location when trying to access its switch.
The story goes on
The company’s entanglement with federal law enforcement agencies takes place amid increasing government scrutiny of cryptocurrencies. US officials, concerned about the lack of control over digital assets, fear they are being used to cover up illegal transactions, including drug deals. In the meantime, the IRS has reportedly expanded its ability to track individuals who owe taxes on cryptocurrency investments. If you ask experts, they will tell you that lawmakers are faced with the eternal dilemma of keeping up with technological innovations.
Binance was founded in China, but had to leave the country following a 2017 ban on crypto trading. According to Bloomberg, a notorious tax haven used by businesses and the wealthy, Binance is now incorporated in the Cayman Islands to hide its finances.
Yesterday the company posted a statement on Twitter confirming compliance with US law. “We take our legal obligations very seriously and work cooperatively with regulators and law enforcement agencies,” said Binance. “We have worked hard to develop a solid compliance program that includes anti-money laundering policies and tools that financial institutions can use to identify and combat suspicious activity.”
The company continued, “We have a long history of helping law enforcement agencies around the world, including the US.”
