WASHINGTON โ A bipartisan group of senators has asked Binance, the world's largest cryptocurrency exchange and onetime competitor to bankruptcy crypto giant FTX, for detailed information about its trading operations amid allegations of illegal practices.
Sens. Elizabeth Warren, D-Mass., Chris Van Hollen, D-Md., and Roger Marshall, R-Kan., requested a large number of documents on company finances, compliance, and risk management practices from Binance and its US affiliate, Binance.US, in a letter dated Wednesday.
"In the years since Binance's founding, the company has faced increasingly disturbing allegations about the legality of its operations," the senators wrote in a statement. letter Addressed to Binance CEO Changpeng Zhao and Binance.US CEO Brian Shroder.
The Department of Justice launched a criminal investigation into Binance and Zhao in 2018, the year after the company launched, amid concerns that the exchange defied US anti-money laundering laws and sanctions. The agency has not decided whether to bring charges against the company or individual executives.
A Binance spokesperson told CNBC that the company hopes to "correct the record" about its operations. The person added that the exchange answers questions from officials in the jurisdictions in which it operates to "explain our business operations and cooperate with regulators."
"Binance.com does not operate in the US nor do we have clients in the US. However, we appreciate the Senators' request and will provide information to help them better understand why we continue to be the most trusted platform with users around the world." the world." added the spokesperson.
A Binance.US spokesperson said separately: โWe appreciate the engagement with lawmakers and look forward to responding to requests from senators.โ The person added that the company is "confident in the soundness of our operations," including its compliance practices and its policy of not trading or lending funds to clients.
Binance has become the definitive leader in the digital currency exchange industry since FTX filed for bankruptcy and its founder, Sam Bankman-Fried, stepped down in November. Bankman-Fried was subsequently arrested and charged with defrauding investors, making illegal political contributions, and committing commodity fraud. among various other charges. Bankman-Fried has pleaded not guilty in the case.
In their letter, the senators outlined the Justice Department's allegations against Binance and argued that the company has shown a lack of transparency.
They also accused Zhao of refusing to disclose the location or entity of his exchange "in what many see as a brazen attempt to circumvent the world's financial regulators, cater to 'unlicensed users,' and violate anti-money laundering laws." ".
The Securities and Exchange Commission also alleged that Zhao used Binance.US as a shell company to distract US regulators from illegal activities, including which allegedly processed at least $10 billion in payments criminals and evaders of US sanctions, the senators said in the letter.
โMr. Zhao's assertion that Binance.US is fully independent is eerily similar to the assertions made by Sam Bankman-Fried regarding the distinction between FTX US and FTX โ claims that appear to be false, given that FTX US has filed for bankruptcy, its users have lost access to their funds, and its new CEO has declared that it is, in fact, insolvent,โ the letter reads.
The senators requested a list of seven items, including full copies of the company's balance sheets dating back to 2017, copies of internal anti-money laundering policies, and any policies written on the relationship between Binance and Binance.US prior to May 16. March.
The FTX crash, which affected more than 1 million investors, highlighted โthe need for real transparency and accountability in the cryptocurrency industry,โ the senators wrote.
"Binance is the world's largest cryptocurrency exchange by volume, with more than 120 million users worldwide, which means it is uniquely positioned to facilitate illicit financial transactions on an unprecedented scale, jeopardizing the savings of millions of everyday users," they wrote.
