French prosecutors have significantly widened their investigation into Binance, the prominent cryptocurrency exchange, amid allegations of money laundering, tax fraud, and various other offenses spanning from 2019 to 2024. This development was reported by Reuters on Tuesday.
Denial of Allegations by Binance
In response to the investigation, Binance has firmly denied the charges. A spokesperson for the exchange stated in an email to CoinDesk that it will “vigorously fight any charges made against it,” asserting its commitment to contesting the claims brought against it.
Scope of the Investigation
The probe, initiated by JUNALCO—an entity within the Paris public prosecutor’s office focusing on economic and financial crime—encompasses alleged criminal activities occurring not only within France but also across the broader European Union (EU). The scrutiny of Binance began in June 2023, centered on accusations of “aggravated money laundering” and the provision of crypto trading services without the necessary regulatory approval from the Autorité des marchés financiers (AMF), the French financial regulator, which Binance secured in 2022.
Binance’s Reaction to Judicial Referral
Binance expressed disappointment over JUNALCO’s decision to escalate the matter to the French judiciary for further investigation, emphasizing that the issues at hand are several years old. In the wake of the initial investigation news in 2023, then-CEO Changpeng “CZ” Zhao referred to the allegations as “FUD” (fear, uncertainty, and doubt) on social media, reiterating Binance’s dedication to maintaining its operations in France, which Zhao described as the exchange’s “flagship center in Europe.”
Previous Legal Troubles for Changpeng Zhao
In April, Zhao faced legal repercussions in the United States, receiving a four-month prison sentence for failing to enforce adequate Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols at Binance, thereby violating the Bank Secrecy Act (BSA). Additionally, Binance admitted to breaching the BSA and sanctions laws, agreeing to pay a staggering $4.3 billion in fines and penalties to resolve the allegations.
Leadership Changes and Compliance Enhancements
As part of Zhao’s plea agreement with U.S. prosecutors, he consented to resign as CEO of Binance. Subsequently, Richard Teng, a former regulatory official, was appointed as the new CEO. Under Teng’s leadership, Binance has reportedly intensified its compliance measures, increasing its workforce and boosting its budget by nearly 40% year-over-year. This shift underscores Binance’s efforts to rebuild trust and ensure adherence to regulatory standards in the evolving landscape of cryptocurrency.
