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(Kitco News) – After a year that saw two major contagion events rock the cryptocurrency market, reports have surfaced that US Department of Justice prosecutors are delaying the conclusion of a long-running criminal investigation into Binance, the world’s largest and most active cryptocurrency exchange.
According to a Reuters report, the investigation originally began in 2018 with a focus on Binance’s compliance with US anti-money laundering laws and sanctions. The case is focused on investigating charges related to unlicensed money transmission, conspiracy to launder money and breach of criminal sanctions.
The case has now reached the point where many of the federal prosecutors involved believe there is enough evidence to warrant an aggressive move against the exchange and its executives – including its founder Changpeng Zhao ( CZ ).
These include prosecutors working in the Office of the Money Laundering and Asset Recovery Division (MLARS), the US Attorney’s Office for the Western District of Washington in Seattle, and the National Cryptocurrency Enforcement Team.
In order for money laundering charges to be brought against a financial institution, they must first be approved by the head of MLARS, according to the report. Leaders from the other two offices, as well as additional senior-level DOJ officials, would also need to sign off on any action against Binance.
In recent months, Binance’s defense attorneys have met with Justice Department officials to oppose filing criminal charges at this time, citing the dangers such a move would pose to the cryptocurrency market.
“Among Binance’s arguments: Prosecution would wreak havoc on a crypto market already in a prolonged slump,” the report said. “Discussions included potential plea deals, according to three sources.”
At the moment, no final decisions have been made on billing. According to Reuters, there are three possible outcomes: The DOJ could file charges against Binance and its executives, negotiate a settlement, or close the case without taking any action.
The years-long case reportedly had a major effect on how CZ runs operations at Binance and led to the hiring of officials from the Internal Revenue Service’s criminal investigations division, the agency that investigated Binance. He also implemented strict confidentiality policies for employees, such as using email as minimally as possible and using encrypted messaging services for communication.
A Reuters investigation found the stock exchange “maintained lax anti-money laundering controls, processed more than $10 billion in payments for criminals and companies seeking to avoid U.S. sanctions, and conspired to evade regulators in the United States and elsewhere.” Binance disputed these findings, calling the calculations of illicit funds inaccurate and descriptions of its compliance controls “outdated.”
The collapse of cryptocurrency exchange FTX in November prompted the DOJ to open an investigation into the exchange’s handling of the company’s funds, but “it is unclear whether this new investigation will add impetus to the investigation into Binance or slow it down.”
The main issue for Binance centers around the US Bank Secrecy Act, which requires crypto exchanges to register with the Treasury Department and comply with anti-money laundering requirements if they conduct “substantial” business in the United States. Binance has never complied with this law “despite nearly a third of its users being in the US the year it launched, according to a company blog post,” according to a Reuters report.
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