What you need to know about Federal Probe Into Binance

Binance’s proximity to collapsing rival FTX has given federal prosecutors a reason to search for new information in their 4-year-old investigation into the world’s largest crypto exchange.

In recent months, US attorneys in Seattle have asked financial firms to turn over records of their communications with Binance, according to a report over the weekend. Washington Post a report. The paper cites two anonymous sources who have reviewed the lawsuits.

The investigation includes the Department of Justice’s money laundering team, the US Attorney’s Office in Seattle, and the National Cryptocurrency Enforcement Team, according to a December report. Reuters.

In fact, the Binance investigation itself preceded the creation of the Ministry of Justice’s Crypto Oversight Team, which was formed in 2021 and acquired a new director, Eun Young Choi, last February.

“As widely reported, regulators are conducting a comprehensive review of the entire cryptocurrency industry facing many of the same issues,” said a Binance spokesperson. Decrypt. “This nascent industry has grown rapidly, and Binance has demonstrated its commitment to security and compliance by investing heavily in our team and the tools and technology we use to detect and deter illegal activity.”

The Justice Department did not immediately respond to a request for comment Decrypt.

US Department of Justice prosecutors disagreed over whether the evidence gathered was indeed sufficient to bring charges against Binance executives, according to the report. Reuters, including CEO Changpeng Zhao. Four unnamed sources familiar with the case told the news agency in December that at least some of the prosecutors involved in the investigation believe the government should continue building its case before pressing charges.

People who wanted to wait until now had their way.

Binance shouted very publicly Reuters On Twitter, he said his December report “attacks our amazing law enforcement team” and linked to a blog post posted by Tigran Gambaryan, the company’s director of intelligence and investigations.

In the post, Gambarian touts the company’s handling of more than 47,000 law enforcement requests in 2022. “Most of what we do takes place behind the scenes, hidden from the spotlight and rarely acknowledged by the media or the general public,” he wrote. .

Even as the US investigation proceeded quietly, Binance has packed its compliance department with former federal investigators like Gambaryan, and has spoken publicly about working with law enforcement to find the hacks and freeze the stolen funds.

While the fallout from the FTX collapse appears to have intrigued investigators about the company, Zhao insists he and his company did not cause it.

According to a translation of a post on the Chinese Binance blog, “FTX has fallen because it misappropriated user assets, and a healthy company will not be destroyed by a tweet.” The post appears to refer to Zhao’s tweet on November 6, which announced that the company would be liquidating its stock of FTX tokens.

He wrote: “Our FTT filter is just post-exit risk management, learning from LUNA” on Twitter. “We were supportive before, but we won’t pretend to be in love after the divorce.”

Meanwhile, there has also been a separate ongoing investigation by the CFTC into the possibility of insider trading on Binance. News of this investigation was not made public until 2021, the same year the CFTC sought to determine whether the company had granted US derivatives traders access to the exchange in lieu of its US arm, Binance US.

Given the way the cryptocurrency markets have fared over the past year, each crash increases scrutiny of the companies that remain.

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