Binance, its American partner questioned for its regulatory compliance and its finances

Three U.S. senators have asked cryptocurrency giant Binance and its U.S. partner Binance.US for information about their regulatory compliance and finances, citing a series of investigations by Reuters and other media, according to a letter released Wednesday. .

In the letter, Democrats Elizabeth Warren and Chris Van Hollen, along with Republican Roger Marshall, called on Binance “to provide transparency about potentially illegal business practices,” adding that the exchange and its related entities “have deliberately evaded regulators. , transferred assets to criminals and penalizes fraudsters and conceals basic financial information from its clients and the public.

In a statement, Binance said “a lot of misinformation has been spread about our company” but that “we appreciate the senators’ request” and will provide information to help them better understand the company.

The senators also questioned the legitimacy of the company’s activities and the security of client assets, in the letter addressed to Binance CEO Changpeng Zhao and Binance.US CEO Brian Shroder.

The collapse of rival crypto exchange FTX, whose founder Sam Bankman-Fried has been accused of fraud, “underscored the need for real transparency and accountability in the crypto industry,” the senators wrote.

Warren and Van Hollen are members of the Senate Banking Committee.

The letter cited Reuters articles from last year that revealed Binance intentionally kept anti-money laundering controls weak, processed over $10 billion (nearly Rs. 82,400 crore) in payments for criminals and companies seeking to evade US sanctions, and conspired to evade regulators in the United States and elsewhere.

The letter also cited a Reuters report from February that Binance had secret access to the Binance.US bank account and was able to transfer $400 million (nearly Rs 3,300 crore) to an account held by a managed trading company. by Zhao.

Binance.US publicly claims that it is entirely independent of global exchange Binance.com and operates as its “US partner”. However, Reuters reported that Binance actually created Binance.US as a de facto subsidiary to distract US regulators from Binance.com.

Binance previously disputed the Reuters articles, calling the calculations of illicit funds inaccurate and the descriptions of its compliance checks “outdated”. The exchange said it “promotes higher industry standards” and seeks to “further improve our ability to detect illegal cryptographic activity on our platform.” A Binance.US spokeswoman said in February that “only Binance.US employees have access” to its bank accounts.

In the letter, first reported by The Wall Street Journal, the senators asked Binance and Binance.US to provide documents and answers to their questions by March 16.

Senators seek information on company balance sheets, US-based users, anti-money laundering policies. They want written policies regarding the relationship between Binance and Binance.US.

© Thomson Reuters 2023