Federal prosecutors working for the U.S. Justice Department asked Binance to provide records relating to money laundering checks, as well as communications between key figures within the company, including its CEO Changpeng Zhao (CZ).
This is according to a Dec 2020 request which remained unseen until recently. Agents working for the money laundering division of the Justice Department asked the crypto exchange to voluntarily hand over documents pertaining to 13 top executives working for the company.
Among those named were the Binance chief himself.
Binance investigation still ongoing
Although the initial request to Binance was made almost two years ago, the investigation remains ongoing according to a source who relayed the matter to Reuters. The prosecutors are particularly interested in establishing whether Binance violated the Bank Secrecy Act, the same legislation BitMEX executives fell foul of earlier this year.
Binance Chief Communications Officer Patrick Hillmann was quick to play down the investigation when he spoke to Reuters. “Regulators across the globe are reaching out to every major crypto exchange to better understand our industry. This is a standard process for any regulated organization and we work with agencies regularly to address any questions they may have.”
As for how Binance responded to the request in 2020, that remains a mystery. Neither the Justice Department nor Binance would provide further detail.
Banking’s greatest hits
If recent history can teach us anything, it is that the Bank Secrecy Act is nothing to be trifled with. On Feb 24, BitMEX founders Arthur Hayes and Benjamin Delo pleaded guilty to breaking the act.
Having offered a guilty plea, the pair were each ordered to pay $10 million in fines. Hayes also received a six months home detention order.
In 2021 BitMEX settled cases with the Commodity Futures Trading Commission (CFTC) and Financial Crimes Enforcement Network (FinCEN) for a total of $100 million.
It now appears that the Justice Department would like to repeat the feat with Binance and CZ. If that investigation follows the same path as it did with BitMEX, it could end with CZ in custody and awaiting trial.
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