Cryptocurrency Exchange Binance Under Fire in France
French authorities have launched a comprehensive investigation into Binance, one of the world’s largest cryptocurrency exchanges, amidst allegations of money laundering and tax fraud. The Paris public prosecutor’s office, specifically the economic and financial crime section (JUNALCO), is scrutinizing activities from 2019 to 2024, encompassing potential offenses across the European Union.
Money Laundering Linked to Drug Trafficking
JUNALCO has confirmed that the investigation is focused on money laundering linked to drug trafficking, with the scope of the probe extending to offenses purportedly committed within France and throughout the EU. This development comes after user complaints surfaced, alleging financial losses due to misinformation on the platform and Binance’s operation without the necessary regulatory approvals.
Preliminary Investigation and Regulatory Challenges
In June 2023, Binance faced a preliminary investigation by the Paris prosecutor’s office for illegal canvassing of clients and “aggravated money-laundering.” Although the crypto platform has refuted the charges, it has faced regulatory challenges in several countries between 2023 and 2024, including Australia, Belgium, Canada, India, Nigeria, and the US.
Compliance Efforts and Settlements
By November last year, Binance had increased its compliance team headcount to 645 full-timers, as part of its “intensified commitment to regulatory adherence” and “ongoing transformation” since its settlement with the US government in 2023. However, the company’s efforts have not been enough to avoid further scrutiny. In the US, Binance settled with the government for $4.3bn over accusations of violating AML laws and operating without registration.
Global Regulatory Pressure
The US Supreme Court recently allowed a lawsuit against Binance involving investors who claim the exchange sold unregistered tokens that subsequently plummeted in value. Additionally, Australia’s corporate watchdog sued Binance’s local derivatives business for allegedly misclassifying retail customers as wholesale clients, depriving them of consumer protections. As regulatory pressure mounts, Binance’s future remains uncertain.
A Statement from Binance
A Binance spokesperson expressed disappointment over the French investigation, stating that the matter is “several years old” and has been referred to the French judiciary for further investigation. However, the company’s response has done little to alleviate concerns about its regulatory compliance and commitment to transparency.
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