The National Jurisdiction for the Fight against Organized Crime (JUNALCO) has just opened an investigation into Binance, the world's largest cryptocurrency exchange platform. The exchange, which has become essential since its creation in 2017, is mainly suspected of aggravated money laundering, money laundering resulting from tax fraud and money laundering linked to drug trafficking. The facts allegedly took place between 2019 and 2024 in France and other countries of the European Union, explains the press release from the Paris prosecutor's office.
Gaps in the fight against crypto-crime
According to the investigations of the National Investigation Directorate of the DGCCRF, the Paris research section and the National Anti-Fraud Office (ONAF), Binance has not complied with all of its obligations in the fight against money laundering and the financing of terrorism. The prosecutor's office cites in particular "its obligations regarding customer knowledge (known as KYC, Know Your Customer)". The law requires platforms operating in France to have all new users fill out an identification form.
This procedure allows a financial entity, such as a crypto exchange platform, to confirm the identity of its customers. Users must provide various documents, such as a selfie, proof of residence, banking information or a copy of their identity card or passport. This mechanism helps combat money laundering or the financing of terrorism.
This is not the first time that Binance has been accused of failing to meet its legal obligations. In the United States, the crypto giant was found guilty of failing to meet the authorities' anti-money laundering requirements following a lengthy investigation. De facto, entities targeted by economic sanctions were able to transfer funds illegally. According to the American justice system, Binance did not report more than 100,000 suspicious transactions involving designated terrorist groups. With his back to the wall, Changpeng Zhao, CEO and founder of Binance, was forced to resign. The leading figure in the ecosystem even spent several months in prison. He was replaced by Richard Teng.
A status problem
In addition, the French judicial authority suspects Binance of having practiced the profession of digital asset service provider before obtaining the appropriate regulatory licenses. To operate in France, crypto platforms must indeed request PSAN status from the Autorité des marchés financiers (AMF). Binance only obtained this sesame in May 2022, before setting up a head office in Paris.
According to the authority, the exchange did not wait for the regulators' approval to operate in France. Before obtaining PSAN status, Binance reportedly launched promotional campaigns with influencers on social networks, which is against the law. To broadcast advertisements in France, an exchange must have PSAN status.
Binance denies and says it is disappointed
The authority opened the investigation following several complaints filed by users in the cryptocurrency world. They accuse the platform founded by Changpeng Zhao of having put forward erroneous information, which led to financial losses. The investigation is currently aimed at assessing the extent of the facts, the involvement of Binance executives and the level of participation of the various entities of the cryptocurrency empire.
Questioned by our colleagues at Reuters, Binance “fully denies the allegations and will vigorously fight any accusations brought against it”. The company said it was "deeply disappointed" by the ongoing investigation.
Source: Reuters
0 Comments