The investigation began in 2018 and is focused on Binance’s compliance with U.S. anti-money laundering laws and sanctions, four people familiar with the matter said
Splits between U.S. Department of Justice prosecutors are delaying the conclusion of a long-running criminal investigation into the world’s largest cryptocurrency exchange Binance, four people familiar with the matter have told Reuters.
The stakes are high for the deeply troubled crypto sector. If the investigation goes against Binance and Zhao, it could loosen Binance’s grip on the industry. Its hold has been strengthened by the recent collapse of rival exchange FTX. Little has been revealed about the case. Reuters reported previously that in 2020, prosecutors requested extensive internal records from Binance about its anti-money laundering checks, along with communications involving Zhao and other executives.
Launched by Zhao in Shanghai in 2017, Binance now dominates the crypto industry. The exchange processed trades worth around $1.6-trillion in October, about half of the entire crypto market’s trading volume. That sum dwarfed its former challenger FTX, which handled $230-billion in trades that month, according to data site CryptoCompare.
In a blog post several days later, Zhao wrote that Binance “must lead by example” going forward. “We cannot let a few bad actors sully the reputation of this industry,” he wrote. The U.S. Bank Secrecy Act, designed to protect the U.S. financial system from illicit finance, requires crypto exchanges to register with the Treasury Department and comply with anti-money laundering requirements if they conduct “substantial” business in the United States. Binance has never done so, despite almost a third of its users being U.S.-based the year of its launch, according to a company blog post.
In December 2020, two MLARS attorneys and a Seattle prosecutor sent the DOJ’s request for documents to Binance, addressed to Gonzalez. The letter sought any records containing instructions that “documents be destroyed, altered, or removed from Binance’s files” or that “information should not be committed to writing.” The request asked for communications involving Zhao and 12 other Binance executives and advisers.
Reuters, which was the first to disclose the request publicly, could not determine how Binance ultimately responded to the DOJ letter. Gambaryan didn’t respond to a request for comment. Binance told Reuters, “We are proud to have in our ranks some of the most celebrated cyber investigators representing virtually every single major international law enforcement agency across the globe.” Binance said they have around 300 investigators working “to protect users from illicit actors.”
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