US Justice Department Investigating Binance for Violation of US Sanctions Related to Russia's Invasion of Ukraine
Key Highlights :
The United States Department of Justice's national security division is conducting an inquiry into whether Binance allowed Russian customers to access the exchange in violation of U.S. sanctions related to Russia's invasion of Ukraine, according to a Bloomberg report that cites five people familiar with the matter. The Justice Department inquiry is another high-profile action against Binance after a 2021 joint investigation with the Internal Revenue Service against the global exchange.
The U.S. Securities and Exchange Commission (SEC) has also been investigating Binance for its relationship with two firms owned by its founder Changpeng Zhao since at least early 2022. Spokespeople for Binance and the Justice Department did not immediately return requests for comment. The Justice Department declined a Bloomberg request for comment. A Binance statement to Bloomberg said the company complies fully with all U.S. and international financial sanctions.
In late March 2023, the U.S. Commodity Futures Trading Commission (CFTC) sued Binance alleging the company knowingly offered unregistered crypto derivatives products in the U.S. against federal law. The exchange has repeatedly pushed back against allegations by saying it has built the world's largest compliance team in the space – a 700-member team that "addresses 1,300 law enforcement requests on a weekly basis," according to head of compliance Tigran Gambaryan.
In recent days, Binance has claimed to have figured out how to keep North Koreans off its crypto exchange by kicking "their a** enough that they're actually able to recognize that Binance was not the place for them." Additionally, in early May 2023, Israel reportedly revealed it had seized roughly 190 Binance accounts with alleged ties to terrorist groups, including two accounts to ISIS. Since neither Israel nor Binance explicitly said Binance had cooperated, it isn't clear how Israel seized accounts on Binance without Binance's cooperation, given Binance isn't obliged to adhere to Israeli laws.
The U.S. Department of Justice's national security division is conducting an inquiry into whether Binance allowed customers to access the exchange in violation of U.S. sanctions related to Russia's invasion of Ukraine. This is the latest in a series of high-profile actions against Binance, which have included a 2021 joint investigation with the Internal Revenue Service against the global exchange, and an investigation by the U.S. Securities and Exchange Commission (SEC) into Binance's relationship with two firms owned by its founder Changpeng Zhao since at least early 2022.
Binance has repeatedly pushed back against allegations of wrongdoing, claiming to have built the world's largest compliance team in the space – a 700-member team that "addresses 1,300 law enforcement requests on a weekly basis," according to head of compliance Tigran Gambaryan. Binance has also claimed to have figured out how to keep North Koreans off its crypto exchange by kicking "their a** enough that they're actually able to recognize that Binance was not the place for them."
In March 2023, the U.S. Commodity Futures Trading Commission (CFTC) sued Binance alleging the company knowingly offered unregistered crypto derivatives products in the U.S. against federal law. Additionally, in early May 2023, Israel reportedly revealed it had seized roughly 190 Binance accounts with alleged ties to terrorist groups, including two accounts to ISIS.
The U.S. Justice Department's inquiry into Binance's potential violation of U.S. sanctions related to Russia's invasion of Ukraine is an important step in holding the company accountable for any wrongdoing. It is also a reminder that exchanges must take compliance seriously and adhere to the laws and regulations of the countries in which they operate. Binance has stated that it complies fully with all U.S. and international financial sanctions, and it will be interesting to see the outcome of the Justice Department's inquiry.
