The IRS is conducting an investigation against Binance accusing it of money laundering. The investigation is confidential
U.S. interest is caused by the exchange's activities in the crypto market. This unregulated industry has always been at gunpoint. Largely, due to the large number of scams and frauds.
Binance is the largest and most popular exchange. It has achieved significant success outside the scope of Government oversight. The company is registered in the Cayman Islands, but does not officially have a headquarters.
Its activities have recently taken an interest in chainalysis, which provides forensic services. Including the IRS and other U.S. federal agencies. According to Chainalysis, it is through Binance that most suspicious transactions related to criminal activity are conducted.
In its report last year, Chainalysis noted that it had observed a movement of "dirty" cryptocurrencies worth $2.8 billion. 27% of Bitcoins were transferred to Binance. This motivates an increased interest in the work of the exchange.
Binance's reaction to the allegations
Binance denied the money laundering charges. According to the spokesman, the exchange takes its legal obligations seriously.
A compliance programme has long been in place, and tools are being used to combat illegal activities. Suspicious activity is recorded and suppressed.
This information was repeatedly confirmed by the head of the exchange C.J. in his speeches. According to him, the exchange strictly follows the rules established in the United States. Advanced transaction analysis techniques are also used to detect signs of money laundering or other illegal activity.
A spokeswoman for the company also denied that the exchange advises Americans to use a proxy network or VPN. This fact is denied by the CJ. In winter, he tweeted that the crypto exchange's security system was blocking access to U.S. users.
That won’t work. Our system blocks US users even if connected via VPN. Not our call. But we must do it. 🙏— CZ 🔶 Binance (@cz_binance) January 23, 2021
The exchange has a separate platform on which it is allowed to trade cryptocurrency on Binance.US. On other Binance platforms, Americans are not allowed to access it.
Which U.S. agencies are reviewing Binance's activities?
The IRS is primarily interested in tax evaders. In addition to the IRS, representatives of the Department of Justice are investigating the activities of Binance's clients and employees. This process has been going on for several months.
Separately, Binance is engaged in CFTC employees. Their mission is to determine whether U.S. residents are given access to derivatives based on digital currencies whose issuers are not registered with the CFTC.
It is worth noting that the U.S. authorities are actively interested in the activities of other exchanges Kraken, BitMEX. This is a systematic approach to the crypto sector, not just one Binance exchange.