A bipartisan panel of U.S. senators asked Binance, the world’s largest cryptocurrency exchange, to disclose details about its operations, accusing Binance of being a “hotbed of illegal financial activity.” Previously, Binance was investigated by the US Department of Justice for alleged money laundering and sanctions evasion.
In a March 3 letter from Massachusetts Democratic Sen. Elizabeth Warren, Maryland Democratic Sen. Chris Van Hollen and Kansas Republican Sen. Roger Marshallu, they asked Binance and its U.S. subsidiary Binance.US to provide extensive documentation on the company’s financial, legal compliance and risk management practices.
In a letter to Binance CEO Changpeng Zhao (CZ) and Binance.US CEO Brian Stroder, the three senators said:
Over the years since Binance was founded, the company has faced a growing mix of allegations about the legality of its operations.
The U.S. Department of Justice began a criminal investigation into Binance and Changpeng Zhao in 2018, the year after its founding, over concerns that the exchange violated U.S. money laundering prevention and sanctions laws, but has not yet decided whether to file a complaint against Binance or the individual in charge.
A Binance spokesperson told the media that it expects authorities to revise operating records and has responded to questions raised by Justice Department officials, including explaining business operations and cooperating with regulatory authorities. The spokesperson said:
Binance.com does not operate in the United States and does not have U.S. customers, however, we value the senators’ requests and provide information to help them better understand why we remain the most trusted platform for users around the world.
Binance.US’s spokesperson added: “We are happy to see the engagement with policymakers and look forward to reviewing the senator’s request.” He said the company is confident it can enhance operations, including legal compliance measures, and will not trade or lend customer money.
In the letter, U.S. senators from both parties referred to the Justice Department’s allegations against Binance while saying the company lacked transparency. Lawmakers also accused Changpeng Zhao of refusing to disclose the location or entity of the Binance exchange:
Many believe that this is a blatant attempt to evade the world’s financial regulators, serve users without a license, and violate anti-money laundering laws.
The senators said in the letter that the U.S. Securities and Exchange Commission (SEC) also accused Changpeng Zhao of using Binance.US as a shell company to distract U.S. regulators from illegal activities, including allegedly handling at least $100 billion in funds to criminals and U.S. sanctions. The letter states:
About Mr. Zhao’s mouth’Binance. US is completely independent’, very similar to Sam Bankman-Fried’s talk about FTX US and FTX, and after FTX US went bankrupt, the latter claim was clearly false, its users were unable to access their funds, and the later CEO was in fact declared insolvent.
Lawmakers made seven demands on Binance, including photocopying the company’s balance sheet dating back to 7 by March 3, photocopying internal anti-money laundering regulations, and concerns about Binance and Binance. US relevance to any written down policy provisions.
The collapse of FTX affected 100 million investors, and the senator said it underscored the need for real transparency and accountability in the cryptocurrency industry. The senators said:
Binance is the world’s most traded cryptocurrency exchange, with more than 1 million users worldwide, which means it is uniquely positioned to facilitate illicit financial transactions at a very large scale, jeopardizing the deposits of millions of users every day.
