https://www.bloomberg.com/news/arti...y-u-s-as-money-laundering-tax-sleuths-bore-in Binance Probed by U.S. as Money-Laundering, Tax Sleuths Bore In By Tom Schoenberg May 13, 2021, 9:43 AM PDT Justice Department, IRS seek information about crypto exchange The federal agencies haven’t accused Binance of wrongdoing Binance CEO on Bitcoin, Crypto Volatility, Going Public Binance Holdings Ltd. is under investigation by the Justice Department and Internal Revenue Service, ensnaring the world’s biggest cryptocurrency exchange in U.S. efforts to root out illicit activity that’s thrived in the red-hot but mostly unregulated market. As part of the inquiry, officials who probe money laundering and tax offenses have sought information from individuals with insight into Binance’s business, according to people with knowledge of the matter who asked not to be named because the probe is confidential. Led by Changpeng Zhao, a charismatic tech executive who relishes promoting tokens on Twitter and in media interviews, Binance has leap-frogged rivals since he co-founded it in 2017. The firm, like the industry it operates in, has succeeded largely outside the scope of government oversight. Binance is incorporated in the Cayman Islands and has an office in Singapore but says it lacks a single corporate headquarters. Chainalysis Inc., a blockchain forensics firm whose clients include U.S. federal agencies, concluded last year that among transactions that it examined, more funds tied to criminal activity flowed through Binance than any other crypto exchange. “We take our legal obligations very seriously and engage with regulators and law enforcement in a collaborative fashion,” Binance spokeswoman Jessica Jung said in an emailed statement, while adding that the company doesn’t comment on specific matters or inquiries. “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.” Spokespeople for the Justice Department and IRS declined to comment. U.S. Concerns U.S. officials have expressed concerns that cryptocurrencies are being used to conceal illegal transactions, including theft and drug deals, and that Americans who’ve made windfalls betting on the market’s meteoric rise are evading taxes. Such worries have been a hindrance to the industry going mainstream, even as Wall Street increasingly embraces Bitcoin and other tokens amid a global investing frenzy. Read More: How Bitcoin Is Edging Toward Financial Mainstream This month’s cyber-attack against Colonial Pipeline Co. that’s triggered fuel shortages across the Eastern U.S. is the latest sign of what’s at stake. Colonial paid Eastern European hackers a nearly $5 million ransom in untraceable cryptocurrency within hours of the breach, Bloomberg News reported Thursday, citing two people familiar with the matter. READ BLOOMBERG’S COVERAGE OF BINANCE: While the Justice Department and IRS probe potential criminal violations, the specifics of what the agencies are examining couldn’t be determined, and not all inquiries lead to allegations of wrongdoing. The officials involved include prosecutors within the Justice Department’s bank integrity unit, which probes complex cases targeting financial firms, and investigators from the U.S. Attorney’s Office in Seattle. The scrutiny by IRS agents goes back months, with their questions signaling that they’re reviewing both the conduct of Binance’s customers and its employees, another person said. The U.S. Commodity Futures Trading Commission has also been investigating Binance over whether it permitted Americans to make illegal trades, Bloomberg reported in March. In that case, authorities have been examining whether Binance let investors buy derivatives that are linked to digital tokens. U.S. residents are barred from purchasing such products unless the firms offering them are registered with the CFTC. Analyzing Transactions Zhao has said Binance closely follows U.S. rules, blocks Americans from its website, and uses advanced technology to analyze transactions for signs of money laundering and other illicit activity. Last year, the firm warned that U.S. residents would have their accounts frozen if they were found to be trading, crypto trade publications have reported. The inquiries follow a Chainalysis report on criminal transactions involving digital tokens. The firm tracked Bitcoin worth $2.8 billion that it suspects crooks moved on to trading platforms in 2019. Chainalysis determined that roughly 27%, or $756 million, wound up on Binance. Binance responded by saying it adheres to all anti-money laundering regulations in the jurisdictions in which it operates and works with partners like Chainalysis to improve its systems. In the U.S., authorities have been cracking down on exchanges for flouting laws that are meant to prevent financial crimes, with officials citing the platforms use by terrorists and hackers. Tax violations have also been a priority, with the government recently winning a court order as it seeks to unmask U.S. clients of Kraken, a San Francisco-based exchange. Read More: Crypto’s Anonymity Has Regulators Circling After Colonial Hack In October, federal prosecutors in Manhattan announced charges against the founders of Seychelles-based BitMEX, accusing them of violating the Bank Secrecy Act by permitting thousands of U.S. customers to trade while publicly claiming to restrict their access. The claims included failing to register as a futures merchant with the CFTC and not having adequate anti-money laundering controls. Three of the BitMex officials pleaded not guilty and a trial has been scheduled for March 2022. One remains at large. Washington Presence With the U.S. circling, Binance has stepped up its presence in Washington and retained a former Treasury Department official and top white-collar defense lawyers to represent it in legal cases and matters being reviewed by regulators. In March, the firm tapped former U.S. Senator Max Baucus, a Montana Democrat, to advise it on policy and government relations. Read More: Crypto Lobby Forms to Shake Reputation as Criminals’ Currency Binance.US, Americans were advised to use a virtual proxy network, or VPN, to disguise their locations when seeking to access the exchange. Jung, the Binance spokeswoman, said the exchange has never encouraged U.S. residents to use VPNs to get around its rules, as doing so would be something “that has always been contrary to our company’s principles.” In January, Zhao tweeted that Binance’s security systems block Americans even if they try to connect through one of the networks. “We have implemented strong access controls that have been tested via external audit and are under continuous review and evaluation by Binance to ensure that the appropriate restrictions are in place and are effective,” Jung said.
Sounds to me like someone with this bloomberg company is just trying to short the market. Binance will always be investigated and of course any kind of money can be used for illicit activity, as we've all heard millions of times already. Which these things are out of their power. It's not their job to trace every single transaction. Coinbase will trace everything, and if they see your money being used on the dark market or using it to fund a money business or using your crypto to trade to a private token like XMR they will ban your account with no questions asked. I can see Coinbase paving the way in the future for the U.S lawmakers to impose restrictions like the ones they already use. They already are helping the I.R.S track crypto payments and selling them tools to monitor crypto transactions better. It's just a matter of time before regulations get tougher with exchanges.
Binance is the largest legalized crypto mixer there is. Hacked crypto can go there, be swaped for other coins and withdrawn to a different crypto with no KYC. Tor can be used to hide the IP. That seems unsustainable to me
Been busy all morning, trimming bnb and cake position quite a bit.. Binance did hire a couple of ex-US regulators and officials recently and they have substantial legal resources, I'd even say they can hire the best However, always good to lower risks when new information is presented
how 'bout going after real criminals Joe? Lots of those on the last round of helicopter money under Donnie.
There's not a doubt in my mind that they will get over these accusations. I'm sure that exchange is probably making well over a few million a day, not to mention CZ has his own tokens. I'm sure they have some people in power on their side. I wouldn't mind if this bad news helped BNB to go on sale. I'm waiting on a discount lol
this could be a positive step. If the OTC dealers, especially those pretending to be legit exchanges, get shut down, crypto products could become truly mainstream and be taken seriously by institutions.
The minute you establish a KYC account the information is reported to the government. If you have transferred non-privacy crypto into or out of a KYC account the government (US) has your public key and can subsequently track your transactions on the block-chain. If you have only ever mined to a hardware wallet there is no opportunity for the government to suss out your public key so transactions are not automatically attributed to you. Privacy coins can dodge this tracking and so I am wary of acquiring them as I think it is inevitable that they are banned or restricted. Just my opinion but many others think similarly. So.. the stuff you do on exchanges is visible and makes those public addresses trackable. The stuff you do directly to hardware wallet from pools or private transactions preserves your privacy for the time being. Traditional onramps and offramps are being clocked.
Jeez that post makes me sound like a criminal. I claim all mining income and pay income tax on it. I supply detailed records to the IRS that includes the transaction hashes. I declare the value at the moment of payout as income and that becomes my cost-basis for future capital gains which I also carefully document and pay. The government has all my public addresses including hardware wallets, exchange accounts and anywhere I made any money on crypto trading. And that is kind of the point of my post. If you transfer/transact crypto from your exchange account to your super-secret-squirrel hardware wallet it isn't super-secret-squirrel anymore.
Binance is instituting some changes in the way they do things, like altering its international Know Your Customer legal document requirements. The main change in the KYC documents is the introduction of the Intermediate Verification requirement. Essentially, from here on out, all new users will be required to complete this verification. Otherwise, they will not be able to access crucial products and services, like crypto deposits, as well as crypto trades and withdrawals. I am not sure whether that will be enough to get them out of trouble though.