U.S. Sought Records On Binance CEO As Part Of Money Laundering Quiz In 2020

US federal prosecutors asked Binance, the world's largest cryptocurrency exchange, to provide internal records about its anti-money laundering checks, along with communications involving its chief executive and founder Changpeng Zhao, according to a late-2020 written request, Angus Berwick and Tom Wilson reported for Reuters.

Photo Insert: Binance was launched by Zhao, known as CZ, in Shanghai in 2017 and as of July controlled over half of the world's crypto trading markets, all the while supposedly enabling criminals to launder at least $2.35 billion in illicit funds through the exchange.

The Justice Department's money laundering section asked Binance to voluntarily hand over messages from Zhao and 12 other executives and partners on matters including the exchange's detection of illegal transactions and recruitment of US customers.

It also sought any company records with instructions that "documents be destroyed, altered, removed from Binance's files" or "transferred from the US."

The December 2020 request, which has not been previously reported, was part of a Justice Department investigation into Binance's compliance with US financial crime laws that remains ongoing, four people familiar with the inquiry said.

US authorities, the people said, are investigating whether Binance violated the Bank Secrecy Act. This requires crypto exchanges to register with the Treasury Department and comply with anti-money laundering requirements if they conduct "substantial" business in the US.

The law, designed to protect the US financial system from illicit finance, provides for jail terms of up to 10 years. Binance has become a hub for hackers, fraudsters and drug traffickers as it kept weak money-laundering checks despite promising tougher compliance, Reuters said.

The request reveals the broad scope of the US investigation into Binance. The letter made 29 separate requests for documents produced since 2017, covering the company's management, structure, finances, anti-money laundering and sanctions compliance, and business in the United States.

"Binance is requested to produce all documents and materials that are responsive to this letter in its possession, custody, or control," it said.

Binance was launched by Zhao, known as CZ, in Shanghai in 2017 and as of July controlled over half of the world's crypto trading markets, processing transactions worth more than $2 trillion that month.

Born in China and educated in Canada, where he holds citizenship, Zhao told Bloomberg in March that he will be based for the "foreseeable future" in Dubai, which that month granted Binance a license to conduct some operations.

Reuters found that the gaps in Binance's compliance program enabled criminals to launder at least $2.35 billion in illicit funds through the exchange, which also served traders in Iran despite US sanctions. Until mid-2021, Binance customers could trade crypto by registering with just an email address.

WEEKLY FEATURE : MVP Group Keeps Lights On During Pandemic