• US prosecutors have issued subpoenas to hedge funds that have interacted with Binance as part of an ongoing investigation into potential violations of US anti-money laundering laws by Binance.
• John Ghose, a former Justice Department prosecutor specializing in crypto cases, believes Binance’s lack of know-your-customer (KYC) requirements for years made it a conduit for criminals to launder money.
• Binance implemented KYC requirements in August 2021 amid intensifying regulatory scrutiny of the world’s leading crypto exchanges.
The US attorney’s office for the Western District of Washington has recently issued subpoenas to hedge funds that interacted with Binance, as part of an on-going investigation into potential violations of US anti-money laundering laws by the world’s leading crypto exchange. The investigation has come as a result of intensifying regulatory scrutiny of the crypto industry, and in particular Binance, which has been accused of failing to properly enforce know-your-customer (KYC) requirements.
John Ghose, a former Justice Department prosecutor specializing in crypto cases, believes that Binance’s lack of KYC requirements for years made it a conduit for criminals to launder money. This, in turn, has led to increased scrutiny of the exchange, and federal prosecutors are currently evaluating whether they have sufficient evidence to bring charges against the exchange.
In December, Reuters reported that prosecutors were in discussion with Binance about a potential settlement, however Binance CEO Changpeng Zhao (CZ) denied that the exchange was working with the Department of Justice to settle matters out of court. In an attempt to comply with regional anti-money laundering regulations, Binance implemented KYC requirements in August 2021, which requires customers to submit identifiable information such as name, address, and government ID in order to open an account and make transactions.
The subpoenas issued to hedge funds come as part of the US attorney’s office investigation into Binance’s potential violations of anti-money laundering laws. The Washington Post reported citing sources familiar with the matter that the prosecutors had directed the investment firms to hand over their communication records with Binance.
It remains to be seen whether the US attorney’s office will bring charges against Binance, and whether the exchange will be able to successfully resolve the matter through a settlement. In the meantime, Binance continues to operate and serve a large number of customers worldwide.