The US government is investigating Binance over allegations that Iran used the crypto exchange to evade sanctions and illegally move funds, according to a Wall Street Journal report published Wednesday.
Binance has denied these claims and even sued the Wall Street Journal on Wednesday for defamation.
The Journal reported in late February that Binance, the largest cryptocurrency exchange in the world, shut down an internal investigation into more than $1bn in transactions with a network funding Iran-backed terror groups; Binance fired employees for looking into the matter and allowed the network to remain active, according to both the Journal and the New York Times.
A Binance spokesperson said in an emailed statement: “Binance categorically did not dismantle any compliance investigation. The WSJ continues to report the same falsities. The truth is that Binance’s investigation continued and uncovered a sophisticated, multi-jurisdictional pattern of financial activity spanning Asia, the Middle East, and beyond. Binance mapped this complex activity, offboarded the relevant user accounts, and reported to law enforcement.” The Journal did not immediately respond to a request for comment about the lawsuit. Binance did not confirm or deny the federal inquiry when asked for comment by the Guardian.
The justice department did not immediately respond to a request for comment to confirm whether the federal government has opened an investigation into Binance. Richard Blumenthal, a Democratic senator representing Connecticut, has also opened an inquiry into Binance’s possible violations of sanctions.
The Journal reported on Wednesday that US government officials have made contact with people who know about the Iranian transactions to obtain evidence. According to the Journal, it is unclear whether the investigation was focused on potential misconduct or the customers on its platform.
News of the justicedepartment inquiry follows a federal lawsuit against Binance and its CEO Changpeng Zhao over violating federal anti-money-laundering and sanctions laws – resulting in a $4.3bn fine, additional oversight, and Zhao’s resignation and imprisonment. That agreement required Binance to enact stronger compliance commitments, including retaining a monitor for five years and re-screening all active users against sanctions lists. Donald Trump pardoned Zhao in October.
