Binance Under Investigation in France for Alleged Money Laundering

Updated: 22 July 2023

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Binance, the largest cryptocurrency exchange, is reportedly facing a preliminary investigation by the Paris prosecutor’s office.

Binance Under Investigation on Regulatory Compliance Issues

France is investigating Binance for allegedly offering its digital asset services illegally. Furthermore, authorities have accused the exchange of engaging in acts of aggravated money laundering, which include competing with investment operations, concealing funds, and converting illicit proceeds.

According to the Binance spokesperson, Binance underwent an on-site visit by relevant authorities last week in compliance with these obligations. He further mentioned that on-site visits by regulators and inspectors are a regulatory requirement for financial institutions in France.

To clarify:

In France, on-site visits by regulators and inspectors, are part of regulatory obligations to which all financial institutions must adhere.

We had an on-site visit last week by the relevant authorities. Binance, as always, was fully collaborative and we met our…

— Binance (@binance) June 16, 2023

Binance has declined to comment on the details of ongoing law enforcement or regulatory investigations. They claim that user information is securely kept and only shared with government officials when legally justified.

The Paris prosecutor’s office did not respond immediately to requests for comment regarding the reported investigation. This investigation comes in the wake of other challenges faced by Binance, such as the U.S. Securities and Exchange Commission (SEC) charging the company with evading securities laws on June 5, which Binance has disputed.

Binance Withdraws from Dutch Market Due to Registration Issues in France

On Friday, Binance announced that it was pulling out of the Dutch market due to its failure to meet the registration criteria as a virtual asset service provider.

In May 2022, Binance obtained registration as a digital asset service provider (DASP) from the French financial regulator. The exchange announced its withdrawal from the Dutch market and expressed its commitment to complying with MiCA regulations.

However, due to the ongoing investigation by French regulators into alleged money laundering activities associated with the exchange, there are doubts about the company’s potential to obtain a MiCA license. Binance France’s President, David Prinçay, addressed the concerns on Twitter when the community sought clarification.

En France, les inspections sur site des régulateurs et des inspecteurs font partie des obligations réglementaires auxquelles toutes les institutions financières doivent se conformer. Nous avons eu une visite sur site la semaine dernière par les autorités compétentes. Binance,…

— David Prinçay (@davidprincay) June 16, 2023

Furthermore, David Prinçay emphasized that Binance has been adhering to all laws in France. However, he mentioned that the company would not comment on the details of law enforcement or regulatory investigations except to state that user information is securely held and only disclosed to government officials with valid and appropriately documented justifications.

More Pressure on Binance As U.S Affiliate Layoff Staff

Following allegations of violating securities laws and asset freezing by regulators, the U.S. affiliate of Binance has reportedly conducted layoffs. Two sources familiar with the dismissals and employees’ social media posts stated that approximately 50 people were affected.

Binance.US spokesperson has yet to respond to requests for comment. Employees in the legal, compliance, and risk departments were reportedly laid off. The US Securities and Exchange Commission (SEC) accused the exchange and its CEO, Changpeng Zhao, of deceptive practices to evade securities laws.

Binance has stated its intention to defend itself against the accusations vigorously. The SEC filed a lawsuit against BAM Trading, the operating company of Binance.US, accusing it of misleading investors regarding nonexistent trading controls on its platform.

Subsequently, the SEC requested a federal court to freeze Binance.US’ assets, which include over $2.2 billion in cryptocurrency and approximately $377 million in US dollar bank accounts. The SEC expressed concerns that the exchange could move the funds offshore.

Binance.US responded by stating that the request was unwarranted and that they considered the SEC’s allegations unjustified. On LinkedIn, two Binance.US employees announced their departure, with one mentioning a round of layoffs. Previously, the United States Securities and Exchange Commission (SEC) sued Binance Holdings Ltd. and its CEO, Changpeng Zhao (CZ), for law violations.