WASHINGTON — A bipartisan group of senators asked Binance, the world’s largest cryptocurrency exchange and once-competitor to bankrupt crypto giant FTX, for detailed information on its business operations amid accusations of illegal practices.
Sens. Elizabeth Warren, D-Mass., Chris Van Hollen, D-Md., and Roger Marshall, R-Kan., requested a slew of documents on company funds, compliance and risk management practices from Binance and its U.S. affiliate, Binance.US, in a letter dated Wednesday.
“Within the years since Binance’s founding, the corporate has faced increasingly disturbing allegations regarding the legality of its operations,” the senators wrote in a letter addressed to Binance CEO Changpeng Zhao and Binance.US CEO Brian Shroder.
The Justice Department began a criminal investigation into Binance and Zhao in 2018 — the 12 months after the corporate was launched — amid concerns the exchange defied U.S. anti-money laundering and sanctions laws. The agency has not decided whether to press charges against the corporate or individual executives.
A spokesperson for Binance told CNBC that the corporate looks forward to “correcting the record” about its operations. The person added that the exchange responds to questions from officials in jurisdictions that it operates to “each explain our business operations and cooperate with regulators.”
“Binance.com doesn’t operate within the U.S., nor do now we have U.S.-based customers, nevertheless, we appreciate the senators’ request and can provide information to assist them higher understand why we remain essentially the most trusted platform with users across the globe,” the spokesperson added.
A Binance.US spokesperson individually said, “We welcome engagement with policymakers and sit up for responding to the Senators’ requests.” The person added that the corporate is “confident within the strength of our operations,” including its compliance practices and policy to not trade or lend customer funds.
Binance has turn out to be the definitive leader within the digital currency exchange industry since FTX filed for bankruptcy and its founder, Sam Bankman-Fried, stepped down in November. Bankman-Fried was later arrested and charged with defrauding investors, making illegal political contributions and committing commodities fraud, amongst various other charges. Bankman-Fried has pleaded not guilty within the case.
Of their letter, the senators outlined the Justice Department’s allegations against Binance, and contended the corporate has showed an absence of transparency.
Additionally they accused Zhao of refusing to reveal the placement or entity of his exchange “in what many regard as a blatant try to dodge the world’s financial regulators, serve ‘users without licenses,’ and violate anti-money laundering laws.”
The Securities and Exchange Commission also alleged Zhao used Binance.US as a shell company to distract U.S. regulators from illegal activities, including that it allegedly processed at the least $10 billion in payments to criminals and U.S. sanctions evaders, the senators said within the letter.
“Mr. Zhao’s assertion that Binance.US is fully independent is eerily much like claims Sam Bankman-Fried made regarding the excellence between FTX US and FTX – claims that seem like false, on condition that FTX US has filed for bankruptcy, its users have lost access to their funds, and its latest CEO has declared that it’s, actually, insolvent,” the letter states.
The senators requested a listing of seven items, including complete copies of company balance sheets dating back to 2017, copies of internal anti-money laundering policies and any written policies on the connection between Binance and Binance.US by March 16.
FTX’s collapse, which affected over 1 million investors, highlighted “the necessity for real transparency and accountability within the crypto industry,” the senators wrote.
“Binance is the world’s largest cryptocurrency exchange by volume, with over 120 million users globally, meaning that it’s uniquely positioned to facilitate illicit financial transactions at an unparalleled scale, imperiling the savings of tens of millions of on a regular basis users,” they wrote.