Binance, a cryptocurrency exchange, is being investigated by the Internal Revenue Service and the Department of Justice, according to Bloomberg, with officials specializing in money laundering and tax evasion taking a keen interest in Binance’s operations.
Binance, which was founded in 2017, is the world’s largest cryptocurrency exchange. It is incorporated in the Cayman Islands and has a Singapore office. According to Bloomberg, the US Commodity Futures Trading Commission (CFTC) is looking into whether Binance allowed Americans to engage in illegal trades on its platform by allowing them to purchase derivatives linked to digital tokens.
Only firms registered with the CFTC can sell these products to US residents. Binance has previously stated that it does prohibit Americans from conducting illegal transactions on its website and that violators’ accounts will be frozen.
According to Chainalysis, a cryptocurrency analytics firm, $756 million of $2.8 billion in criminal transactions involving the bitcoin cryptocurrency went through Binance in 2019.
A spokesperson for Binance said the company does not “comment on specific matters or inquiries,” but added in an email to The Verge that the company takes its “legal obligations very seriously.
“We have worked hard to build a robust compliance program that incorporates anti-money laundering principles and tools used by financial institutions to detect and address suspicious activity,” the spokesperson said. “We have a long history of assisting law enforcement agencies around the world, including in the United States.” The scope of the federal investigation into Binance was not disclosed.