(Sept 22): Federal prosecutors are investigating whether Binance Holdings Ltd, the operator of the world’s biggest crypto exchange, violated US sanctions on Iran by not stopping certain trading on its platform, according to people familiar with the matter.
The probe of Binance’s compliance efforts is being handled by the Manhattan US attorney’s office, said the people, who asked not to be identified due to the sensitivity of the matter. The Department of Justice’s criminal division in Washington is also involved and authorities are scrutinising whether Binance knowingly allowed the trading, said one of the people.
Justice Department investigations can end without any charges being filed. The specific transactions that Manhattan federal prosecutors are focused on weren’t immediately clear.
Spokespeople for the Justice Department and the Manhattan US attorney’s office declined to comment.
“We maintain a zero-tolerance policy for sanctions violations,” Binance said in a statement. “We fully cooperate with law enforcement, and we remain committed to rooting out and shutting down bad actors.”
Binance has previously drawn scrutiny from US authorities. The company pleaded guilty almost three years ago to failing to comply with US banking and sanctions laws and agreed to pay a US$4.3 billion (RM17.5 billion) penalty.
Since that settlement, Binance has sought to emphasise its cooperation with law enforcement and regulators. The company said in a blog post in February that overall, more than 1,500 people, or about 25% of its global headcount, worked on compliance.
US prosecutors have taken multiple Iran-related actions in recent months, as the US-Israel war with Iran continues. Just last week, federal prosecutors in Manhattan sought forfeiture of US$61 million it says was generated from Iranian black-market oil sales and laundered through Binance. The Manhattan US attorney’s office didn’t accuse Binance of wrongdoing in that action.
In a statement after prosecutors’ Sept 14 filing, Binance said it didn’t permit any transactions with people who were sanctioned and pledged to continue to cooperate with law enforcement on the matter. Prosecutors said that two Hong Kong-registered companies had misrepresented their business activities.
In February, multiple publications reported on an internal Binance investigation finding more than US$1 billion had moved through the platform to Iran-linked entities. Binance has contested some details of the reports, while saying it cooperated with law enforcement officials and that its compliance programme was robust.
“No exchange, whether crypto or traditional, can guarantee that risk never touches its platform,” the company said in a blog post on March 10. “What distinguishes a responsible institution is what happens when it does: whether the risk is detected, investigated, mitigated, and reported. In every case described in recent coverage, Binance did all four.”
In addition to agreeing to pay billions of dollars in its 2023 settlement with US agencies, Binance pledged to enhance compliance. The firm was saddled with two corporate monitors.
As part of the resolution, co-founder Changpeng Zhao also pleaded guilty to failing to maintain an effective anti-money laundering programme. He stepped down as chief executive officer and ended up serving four months in prison. President Donald Trump granted Zhao a pardon last year.
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