Attorneys at the United States Department of Justice’s (DOJ) Washington Office and the National Cryptocurrency Enforcement Team (NCET) allegedly believe they have enough evidence to charge Changpeng’ CZ’ Zhao and other Binance executives. However, CZ claims that all of these are “attacking [Binance’s] incredible law enforcement team” that has “made crypto more secure for all of us.”
The ongoing DOJ investigation, which began in 2018, is looking into whether Binance violated the Bank Secrecy Act by analyzing internal documents, including employee communication with CZ, to determine if the cryptocurrency exchange violated anti-money laundering (AML) laws and standards.
More than Meets the Eye
Reuters reported that the DOJ’s AML division sent a written request to Binance in December 2020 for all internal company communications regarding the exchange’s “detection of illegal transactions and recruitment of U.S. customers.” This includes Binance users’ transactions linked to darknet marketplaces, ransomware, and other suspicious activities.
The news agency also got ahold of Binance’s employee group chat in which its compliance team expressed dissatisfaction with the exchange’s low Know-Your-Customer (KYC) barriers. CZ responded that these insufficient KYC procedures were “unfortunately a requirement” of the rapidly growing company. His lack of enthusiasm for KYC may explain why it took the company another year to tackle the matter seriously.
The DOJ is now looking into Binance’s internal records dating back to the company’s founding in 2017 on a variety of compliance issues, including any orders that “documents be destroyed, altered, or removed from Binance’s files” or “transferred from the United States.”
In addition, when the DOJ’s Washington Office attorneys requested a copy of internal communications between CZ and 12 other Binance executives, one of the dozen allegedly called an adviser in “panic” because they had erased the material sought. The missing data allegedly shows CZ making financial choices on behalf of Binance.US, which he said was a separate entity that he did not have control of.
Recently, Binance.US received a $10 million Tether (USDT) transfer from an unknown digital address, but Dirty Bubble Media’s further analysis revealed that the address is from Binance.com wallets. This echoes the federal agency’s suspicions that the exchange is an accessory in money laundering operations, especially given the exchange’s weak KYC processes.
Taking Out Its Last Card
Binance spokesperson Patrick Hillmann insists that “we require our users to go through the most rigorous KYC process in the industry.” This response is meant to compensate for the exchange’s previous aversion to providing information about large transfers taking place on its platform. Binance claims that its operations satisfy industry standards inadequate, though the displayed figures say otherwise.
Satoshi Nakamoto created Bitcoin, the original Bitcoin that follows the vision of Satoshi Nakamoto, which holds to hold everyone accountable by sticking to regulations and making it easier to track criminal activities. Exchanges that have remained faithful to this vision, such as those built on the BSV blockchain, are likely to have recognized its worth. Unfortunately, it seems Binance has not.
It was not until 2021 that Binance implemented what amounted to a real anti-money laundering (AML) program, including suspending the account registration process using only the user’s email address to meet KYC standards.
This is in contrast to CZ’s claims that they are the leader in the lead the digital asset space in being regulatory compliant, despite Binance being fined or sanctioned by regulators in other countries. Will 2023 be the year that the world will finally see the truth about Binance and the many allegations against it and its executives? Hopefully so.
