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DOJ Investigating Binance for Possible Money Laundering Violations

S.J. Steinhardt
Published Date:
Jan 9, 2023

The U.S. Attorney’s Office for the Western District of Washington in Seattle has issued subpoenas to some investment firms, directing them to hand over records of their communications with cryptocurrency exchange Binance, the Washington Post reported, attributing the information to two anonymous sources who each received one of the subpoenas. The Post said that they spoke on the condition of anonymity in order to discuss the confidential matter.

The subpoenas are reportedly part of a long-running investigation into potential violations of money-laundering rules at Binance. Reuters had previously reported that federal prosecutors are determining whether to charge company executives, including Changpeng Zhao, with crimes.

Prosecutors may be examining whether Binance violated the Bank Secrecy Act, which requires financial institutions to verify the identities of their customers and report suspicious activity that could indicate crimes such as money laundering or tax evasion, John Ghose, a former U.S. Department of Justice prosecutor who specialized in cryptocurrency cases, told the Post.

Binance chief strategy officer Patrick Hillmann told the Post that the company is talking to “virtually every regulator across the globe on a daily basis,” but he would not comment on the status of any federal investigation.

For years, Binance allowed its users to buy and sell cryptocurrency on the platform without identifying themselves, making it possible to launder money, Ghose told the Post. “Binance did not have a reputation of being a responsible exchange” during his time as a prosecutor, he said.

Hillmann said to the Post, “Over the last two years, the company has completely changed its posture,” meaning that it has invested in compliance programs, worked closely with law enforcement and developed new technology to catch criminals on its platform.

Several large U.S.-based crypto-focused hedge funds interviewed by the Post said they either do not use Binance or only have accounts on the more limited Binance.US trading platform that is based in Palo Alto, Calif. and owned by Zhao.

A challenge for U.S. prosecutors will be to prove that Binance is subject to American laws. Zhao founded Binance in China but later moved it to Japan and then Malta. Since 2020, he has claimed the business has no individual headquarters.

The company’s primary offshore exchange,, does not operate in the United States. Because of that, it does not believe it needs to register with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), a baseline requirement for complying with the Bank Secrecy Act, Hillmann told the Post. The Post reported that a spokesperson for FinCen declined to comment.

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