Turns out, this is another eventful year for cryptocurrencies. In five months, the price of the memetic coin Dogecoin skyrocketed, PayPal opened cryptocurrency transactions, and Tesla took a 180-degree turn on Bitcoin payments. To exacerbate the volatility, conflicting reports claim that Binance, the world’s largest cryptocurrency exchange, is under investigation by the US Department of Justice and the US Internal Revenue Service (IRS).
According to Bloomberg, officials interested in how to use crypto for money laundering seek information from people familiar with Binance transactions. However, the publication did not confirm whether the investigation was related to a criminal act and stated that not all the investigations stemmed from “allegations of wrongdoing.”
Changpeng Zhao, the CEO of Binance, quickly inserted his story. Without clearly naming the article, he tweeted that the “news” had a negative impact on his company. According to Zhao, Binance has “cooperated with law enforcement agencies to crack down on bad actors,” adding that this story makes it “seem like a bad thing.”
However, the truth is that cryptocurrency exchanges (which are prohibited from operating in the United States) have been filing money laundering charges for some time. The latest report from blockchain forensic company Chainalysis stated that Binance is the top destination for illegal cryptocurrencies in 2019.
Sources told Bloomberg that regulators are also investigating whether Binance allows Americans to conduct illegal transactions. Doing business in the United States is prohibited because it offers securities that are not registered with the Commodity Futures Trading Commission. Although the company has repeatedly rejected these requests, the encrypted news site stated that its restrictions on Americans can be easily circumvented. Bloomberg added that Binance had previously recommended that Americans use a VPN to hide their location when looking to access their exchanges.
With increasingly strict scrutiny of cryptocurrencies by regulatory agencies, has come the company’s entanglement with federal law enforcement agencies. US officials are concerned about the lack of oversight of digital assets and that they are used to cover up illegal transactions, including drug transactions. At the same time, the Internal Revenue Service (IRS) is reported to have been expanding its ability to track people who owe taxes on cryptocurrency investments. If you ask the experts, they will tell you that legislators face the perennial dilemma of catching up with technological innovation.
Binance was founded in China but was forced to move out of the country due to the ban on crypto transactions in 2017. According to Bloomberg News, Binance is now registered in the Cayman Islands. According to Bloomberg News, Binance is a tax haven for wealthy companies and individuals in order to hide their financial status.
Yesterday, the company issued a statement on Twitter stating that it complies with United States Laws. Binance said: “We attach great importance to our legal obligations and work with regulators and law enforcement agencies.”
The company continued: “We have been working hard to establish a robust compliance program that combines anti-money laundering principles and tools for institutions to detect and prosecute suspicious activity across the world, including the United States.”