On Jan. 7, 2023, Washington Post reported that the federal prosecutors had subpoenaed U.S.-based hedge funds relating to Binance. Federal prosecutors are investigating the cryptocurrency exchange platform’s potential circumvention of anti-money-laundering measures.
Investigation on Binance reaches hedge funds in the U.S.
The report indicates that the U.S. Attorney’s Office for the Western District of Washington in Seattle is in charge of the investigation. In recent months they have also subpoenaed other businesses asking for records of their interactions with Binance.
When asked about the current development, Patrick Hillmann, the chief strategy officer at Binance, brushed off the issue, stating that the business speaks with “nearly every regulator across the globe daily.”
He, however, did not give more information on the state of any American investigation. Joshua Stueve, the department spokesperson, also did not comment on the matter.
Unfortunately, the subpoenas are being issued when Binance, the biggest cryptocurrency exchange platform, is already under increasing media and regulatory scrutiny regarding its operational procedures and financial statements.
Binance’s investigation is when the cryptocurrency market is facing extreme uncertainty. Never before have governments become more concerned about the largely unregulated internet marketplaces for digital assets.
Besides, the recent collapse of FTX has also reduced investors’ confidence in the volatile and fragile crypto market. The police are attributing the collapse to a multi-year fraud operation against investors.
Legal experts who talked to the publication claim that Binance has a long history of frustrating financial regulators and law enforcers. They are prone to getting around rules and exploiting legal loopholes to continue operating their business globally.
The main concern is that users can buy and sell crypto on their platform without identifying themselves. This lack of identification makes the platform a potential place for money laundering and a hub for scammers, hackers, and drug traffickers.
Binance efforts to comply with government regulations
Admittedly, Binance management agrees with its imperfection and has been putting up measures to strengthen its commitment to compliance. They plan to hire 500% more security and compliance personnel by 2022.
In the spirit of improving its compliance, the business established a worldwide advisory board last October. The board is presided over by Max Baucus, a former Democratic senator from Montana.
Binance appears anxious to strengthen its ties with the federal government of the United States. They had recently started participating in crypto lobbying in the Capitol.
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