Reuters reports that it was recently able to review a December 2020 written request from US Justice Department’s money laundering section that asked Binance, the world’s largest cryptocurrency exchange, to hand over records about its anti-money laundering checks and communications involving Changpeng Zhao, the company’s chief executive and founder.
According to the report, four people familiar with the inquiry revealed that the request, which has not been previously reported, is part of an investigation into Binance’s compliance with US financial crime laws, particularly the Bank Secrecy Act.
The Department allegedly requested that Binance voluntarily provide messages from Zhao and 12 other executives and partners that had to do with the firm’s management, structure, finances, anti-money laundering and sanctions compliance, and business in the United States.
The letter reportedly made 29 separate requests for documents produced as far back as 2017, the same year the exchange was founded in Shanghai. It also allegedly asked for company records marked “documents be destroyed, altered, or removed from Binance’s files” or “transferred from the United States.”
But, in response to Reuters’ request for comment, Binance Chief Communications Officer Patrick Hillmann dismissed the matter as routine, saying that “regulators across the globe are reaching out to every major crypto exchange to better understand our industry. This is a standard process for any regulated organization and we work with agencies regularly to address any questions they may have.”
He added that Binance has “an industry-leading global security and compliance team,” that has over 500 employees, including former regulators and law enforcement agents. He did not, according to Reuters, say how the exchange responded to the request.
Under the Bank Secrecy Act, which was created to protect the US financial system from illicit finance, crypto exchanges are required to register with the Treasury Department, and much like traditional financial institutions, comply with anti-money laundering requirements if the business conducts “substantial” business in the US.
Reuters’ newest discovery, which gives a glimpse into the breadth of the federal government’s investigation into Binance, is part of a series of reports on the alleged cracks on the firm’s compliance program, which has reportedly allowed criminals to launder at least $2.35 billion in illicit funds. They recently reported on how the exchange apparently failed to completely cut off its services to Iran after the US reimposed the country’s sanctions in 2018.
Information for this briefing was found via Reuters and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
