DOJ Investigates Binance for Russia Sanction Violations

Federal authorities are reportedly investigating whether cryptocurrency exchange Binance violated US sanctions against Russia.

The US Department of Justice investigation focuses on whether the company was used to allow the Russians to circumvent sanctions, Bloomberg News reported Friday (May 5), citing people familiar with the matter.

According to Bloomberg, the sources say the investigation, conducted by the Justice Department's homeland security division, is operating in parallel to another investigation conducted by its criminal division.

PYMNTS has reached out to Binance for comment but has yet to receive a response. The Bloomberg report said Biancne has been in talks with the Justice Department to resolve previous complaints that she was used to circumvent sanctions against Iran, according to unnamed sources.

This new probe is the latest in a series of investigations involving the world's largest cryptocurrency exchange, and comes at a time of heightened scrutiny in the industry.

For example, as noted here Friday, the Securities and Exchange Commission (SEC) and its chairman, Gary Gensler, have been increasing your compliance actions against the crypto industry in the last two years.

In 2022, the SEC filed a total of 30 cryptocurrency-related enforcement actions, up 50% from 2021. And in the first months of this year, the agency issued 13 enforcement actions, which is on track for an increase in more than 25% compared to last year's numbers.

“Industry watchers, along with market participants, are increasingly of the view that federal regulators will continue to put heavy pressure on the largest crypto companies to set precedents for new regulation this year,” PYMNTS wrote.

“We are 100% committed to the US because the rule of law prevails here,” Coinbase CEO Brian Armstrong told investors on the company’s Q1 2023 earnings call last week, and he stressed that it was "really important for the United States to get this." [crypto regulation] good.”

From the SEC's perspective, it has already gotten the regulation right, and companies need to acknowledge that prevailing fact when complying.

“Since most crypto tokens are securities, it follows that many crypto intermediaries transact securities and have to register with the SEC,” Gensler told the House Financial Services Committee. last monthadding that the crypto industry currently carries “risks and conflicts that the commission does not allow in any other market.”

In addition to pressure from the Department of Justice and the SEC, Binance was also recently sued for him

Commodity Futures Trading Commission (CFTC) in a legal action accusing the company and founder/CEO Changpeng Zhao of circumventing US compliance rules to boost profits.

Anyway, the commission is supposedly open to work with Binance.

“We have been in ongoing discussions with the company to describe what we understand to be potentially problematic conduct and to give them an opportunity to explain that conduct and help us find a way forward,” Kristen N. Johnson of the New York Futures Trading Commission Basic products. (CFTC) in an interview with CNBC in late April.