Binance Faces Scrutiny, Senators Demand Business Operations Detail

The United States senators requested Binance to furnish comprehensive information regarding their business operations. The purpose is to scrutinize the illegal practices of exchange and its US counterpart, Binance.US.

Senators Elizabeth Warren (D-Mass.), Chris Van Hollen (D-Md.), and Roger Marshall (R-Kansas) wrote a letter to Binance on March 01, 2023. Senators pushed the exchange to “provide transparency about potentially illegal business practice. 

The Major Binance Issues Addressed

The regulators addressed the chief executive officer of Binance, Chengpeng Zhao, and Brian Shroder, CEO of Binance. US. Authorities have sought information on the financials, risk management, and regulatory compliance of exchanges, and affiliated entities. The regulators took measures in the wake of the collapse of FTX, which roiled the crypto market. 

 Although Zhao made transparency and scrutiny commitments, the inner workings of Binance’s core business remain concealed from public view. Binance shows limited financial information to the public, indicating that the exchange is a hub for illicit activities. 

Letter Also Discussed FTX Downfall

The letter also referenced the disastrous downfall of the famous crypto exchange, FTX. The collapsed exchange was once the third-largest cryptocurrency in the world before collapsing in November of last year. Moreover, the senators emphasized that the event highlighted the urgent need for genuine transparency and accountability within the crypto industry.

The Regulator Highlights The Core Problems:

The company evaded the United States regulator and did not register with the treasury department, the firm possessing one-third of its users in the United States, it violated the Bank Secrecy Act.  

Related Reading | Binance Australia’s Derivatives Services Being Investigated By Regulator 

The New York State Department of Financial Services (NYDFS) directed Paxos, to halt the issuance of BUSD, Binance branded stablecoin. Paxos is a “trust” company working under the regulatory purview to sever ties with Binance.  Additionally, Paxos has been notified by the SEC to file a lawsuit against the firm. Moreover, the firm infringed on investor protection laws with its BUSD token offering.

As per the Senators’ letter, Binance had been doing money laundering of cryptocurrency worth of billion dollars. Furthermore, the exchange has transferred at least $10 billion to individuals who have violated sanctions or are involved in criminal activities. 

The letter indicates that Binance’s business might increase money laundering. In addition, Zhao, the CEO, has instructed the compliance team to significantly reduce or even eliminate the platform’s anti-money laundering measures.

The author’s views are for reference only and shall not constitute any investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing.

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