Binance Holdings, the world’s largest cryptocurrency exchange, is under investigation by the Internal Revenue Service and the Department of Justice, as part of the US efforts to root out the illicit activity that has thrived in the unregulated market.
As part of the inquiry, officials who investigate money laundering and tax offenses have sought information from individuals with insight into Binance’s business, according to people familiar with the matter who asked not to be disclosed as the probe is confidential.
Binance, which is incorporated in the Cayman Islands (UK) and has an office in Singapore, says it doesn’t have a single corporate headquarters. The company was founded in 2017 by tech executive Changpeng Zhao.
According to reports, the US Commodity Futures Trading Commission (CFTC) has been investigating whether Binance allowed Americans to make illegal trades on its platform, by letting them buy derivatives linked to digital tokens.
US residents are barred from purchasing such products unless the firms offering them are registered with the CFTC. Binance has said in the past it does block Americans from conducting illegal transactions on its website, warning that the violators’ accounts will be blocked.
“We take our legal obligations very seriously and engage with regulators and law enforcement in a collaborative fashion. We have worked hard to build a robust compliance program that incorporates anti-money laundering principles and tools used by financial institutions to detect and address suspicious activity,” a Binance spokesperson said.
Chainalysis, a blockchain forensics firm whose clients include US federal agencies, reported that in 2019, some $756 million of $2.8 billion worth of criminal transactions involving the bitcoin cryptocurrency went through Binance.