- U.S. prosecutors are reportedly investigating hedge funds’ relationships with Binance as part of a long-running probe into money laundering at the cryptocurrency exchange.
- Binance has made efforts to improve regulatory compliance and build trust with authorities, including forming a global advisory board.
- One challenge for U.S. prosecutors will be proving that Binance is subject to American laws, as the company claims to have no singular headquarters.
Federal prosecutors are reportedly investigating hedge funds in the United States as part of a long-running probe into potential money laundering violations at cryptocurrency exchange Binance. In recent months, the U.S. attorney’s office for the Western District of Washington in Seattle has issued subpoenas to investment firms for records of their communications with Binance.
It’s worth noting that the subpoenas do not necessarily mean that authorities are planning to bring charges against Binance or the hedge funds. Instead, prosecutors are reportedly considering a possible settlement with Binance and evaluating whether they have enough evidence to bring indictments against the company.
Binance Takes Steps to Improve Regulatory Compliance
Binance has faced scrutiny from financial regulators and law enforcement agencies for years. This was due to allowing users to buy and sell cryptocurrency on its platform without identifying themselves. This made it easy for people to launder illicit funds and led to unlicensed money transmission and money laundering allegations.
Binance has made significant investments in compliance programs to improve its relationship with regulators, worked closely with law enforcement, and developed new technology to catch criminals on its platform. Binance has also formed a global advisory board chaired by former Democratic senator Max Baucus and includes former top Obama adviser David Plouffe.
Binance’s Lack of a Single Headquarters Complicates U.S. Investigation
One of the challenges that prosecutors may face in their investigation of Binance is determining whether the company is subject to American laws. Binance was founded in China but has since moved to Japan and Malta, and its CEO, Changpeng Zhao, has claimed that the company has no headquarters.
Binance has marketed risky financial products, such as cryptocurrency derivatives, as a crucial part of its success. These products allow users to place high-leverage bets on speculative digital tokens like dogecoin.
However, such products are generally prohibited in the U.S., and Binance has banned Americans from accessing its central offshore exchange.
Some Americans have claimed to be able to bypass Binance’s restrictions and access the site from the U.S. through various means, such as setting up shell businesses in other countries and obtaining residency documents. However, Binance has said that it has tested these loopholes and found that they do not work.
It remains to be seen how the U.S. investigation of Binance and its potential settlement with prosecutors will play out. However, it is clear that the company is facing increasing regulatory scrutiny and is taking steps to improve its compliance efforts. As the cryptocurrency industry continues to evolve, it will be necessary for companies like Binance to work closely with regulators to ensure that they are operating within the bounds of the law.
