Crypto Giant Under Scrutiny in France
The Paris public prosecutor's office has confirmed today that Binance, the largest cryptocurrency exchange globally, is currently under preliminary investigation for engaging in illegal client canvassing and money laundering, among other unlawful acts, according to Le Monde.
The investigation, led by French authorities, specifically targets Binance's French unit for its alleged involvement in the illegal provision of digital asset services and acts of "aggravated" money laundering. Reportedly, the public prosecutor's office says Binance may have committed "aggravated money laundering by taking part in investment operations, concealment and conversion, the latter being carried out by perpetrators of offenses having generated profits." The firm is also under scrutiny for alleged failure to comply with Know Your Customer (KYC) regulations.
Additionally, the crypto exchange is accused of operating as a digital asset service provider (PSAN) illegally prior to receiving regulatory approval for compliance with anti-money laundering (AML) guidelines in France in May 2022. A group of French investors filed a complaint in December last year, alleging that Binance misled the public and engaged in the promotion of services prior to obtaining legal authorization. The complaint, brought by clients of the platform to the Paris public prosecutor's office, includes charges such as "misleading commercial practice."
Following its recognition as a PSAN by the AMF, the French market regulator ("Autorité des marchés financiers"), Binance has been authorized to provide trading and custody services for various cryptocurrencies, including bitcoin and ethereum.
Binance Responds Amid US Lawsuits
In response to the ongoing investigations and regulatory matters, a spokesperson from Binance emphasized the company's strong commitment to complying with laws in France and all the markets where they operate.
They highlighted Binance's significant investments in global compliance efforts and their active cooperation with law enforcement agencies.
"We will not comment on the specifics of law enforcement or regulatory investigations except to say that information about our users is held securely and only provided to government officials upon receipt of documented, appropriate justification." Binance spokesperson.
In a post published last year and titled "Crypto and Money Laundering: An Inconvenient Truth", Binance said crypto was "an awful vehicle" for money laundering, and added that the platform has "the world’s most sophisticated anti-money laundering systems and employs the most experienced anti-money laundering investigators".
It’s also important to understand that media attacks on crypto and Binance will continue. Some large news organizations will continue to be influenced by actors seeking to limit the growth of crypto and Binance. [...] As for Binance? We will continue to do two things. Protect users and build. - source
Other Hurdles in Europe
The French investigation reflects a recurring pattern of alleged regulatory violations that have plagued Binance's global operations. The crypto exchange also announced today it is ceasing operations in the Netherlands after failing to secure a virtual asset service provider (VASP) license from the Dutch regulator, which confirms compliance with AML guidelines. As of July 17, Dutch residents will only be able to withdraw their funds from the platform - new users based in the Netherlands will not be able to register.
Binance also filed an application to terminate its registration with Cyprus' securities regulator, citing a strategic shift towards consolidating its focus on a reduced number of regulated entities within the European Union.
Several countries, including France, Italy, Spain, Poland, Sweden, and Lithuania, have ruled that Binance complies with AML regulations, but it seems to only be a matter of time before the firm faces new investigations and rejections. We'll keep Observing.