The United States Justice Department (DOJ) national security division is investigating Binance for allowing Russians to us the exchange when the country was being sanctioned. The agency says that the action was a violation of U.S sanctions.
According to a Bloomberg report, the investigation is carried out on the same seriousness as a criminal investigation, although neither the company nor any of its executives has been accused in connection with the probe.
Binance limited access to its services for Russian users last month in line with financial sanctions placed on the country because of the war in Ukraine. As a result, only Russian users with accounts holding a portfolio of less than $10,000 could trade and carry out other activities.
However the exchange recently “quitely” allowed the big accounts access to its full range of services. This made such big accounts to bypass the sanctions imposed on the country, something that didn’t sit well with the U.S government.
The ongoing investigation is aimed at finding out if Binance illegally connived with the Russian government to let Russians send money globally through the exchange, thus violating U.S sanctions. Binance has however told Bloomberg that it was fully compliant with U.S sanctions.
Binance’s Woes in the U.S
Binance is the biggest cryptocurrency exchange in the world by trading volume. It is also one of many crypto companies in the U.S that have faced many regulatory challenges from regulators in the country. The exchange recently faced a lawsuit from the commodities futures trading commission (CFTC).
In the lawsuit, the commission accused Binance of “willfully” violating federal regulations in the country. As a result, it is seeking for penalties as well as suspension of the exchange’s operations in the U.S. The case is still on, but no conclusions have been arrived at yet.
Meanwhile, Binance recently cancelled a deal to acquire the assets of failed trading platform Voyager, citing fear of regulatory troubles. This is coming on the heels of many challenges facing crypto companies in the country as regulators launched a massive crackdown on the industry.
Will Binance Exit the U.S
Binance’s global exchange currently doesn’t offer services to U.S residents due to regulatory pressure that made it to create a U.S arm known currently as Binance U.S. Even now, the U.S government’s seemingly anti crypto policies seem still intact and haunting Binance.
A recent trend as a result of the crackdown is that crypto companies are abandoning the U.S for crypto havens such as Hong Kong and Australia. CEO of the biggest U.S based crypto, Coinbase, Brian Armstrong recently said his company was open to the idea of relocating outside the country if the regulatory climate doesn’t become more friendly.
Coinbase itself, like Gemini – another top U.s exchange – has launched a crypto derivatives trading exchange outside the country because of the regulations which forbid such trading. Interestingly, derivatives trading accounts for most of the crypto trading volume worldwide.
With the fresh pressure that Binance is facing, will it consider leaving the U.S entirely even though the country has a huge crypto market? Coinbase recently filed a lawsuit against the Securities and exchange commission demanding that the commission makes clear regulatory guidelines for crypto.
If Coinbase wins, the woes may soon be over but if not, there may be harssher times coming ahead for Binance that could force it to move out completely.