French authorities have been investigating Binance for multiple alleged violations since February 2022, according to local news. report. The Paris public prosecutor’s office told local media that the investigation into the largest cryptocurrency exchange is being carried out on two fronts.
First, authorities are investigating whether Binance solicited French users and thereby operated without a license in the country. Second, they are investigating “aggravated money laundering practices through participation in investment activities, concealment, and liquidation, the latter carried out by perpetrators of crimes that generate profits.”
Exacerbated money laundering refers to organized money laundering and large amounts of money laundered involving multiple money launderers. According to local media reports, authorities believe Binance has failed to meet its Know Your Customer (KYC) and Anti-Money Laundering (AML) obligations.
It is worth noting that Binance did not implement mandatory KYC verification until August 2021.
suspected illegal operations
Since 2019, to operate a cryptocurrency exchange in France, it is compulsory to have a Digital Asset Service Provider (DASP) license and to be registered with the Financial Market Authority (FMA). Without a license and registration, cryptocurrency companies cannot advertise their services to French consumers.
Binance is fully regulated It was established on a French cryptocurrency exchange in May last year. However, the exchange has been operating domestically since 2020, according to local news reports. Authorities suspect that Binance illegally advertised and advertised its services domestically to attract potential French users, possibly before obtaining the license.
Such allegations echo charges filed against the exchange by the US Securities and Exchange Commission (SEC) earlier this month. In the lawsuit, the SEC alleges that Binance illegally solicits US customers, mixes user and company funds, and fails to comply with anti-money laundering rules.
Binance is cooperating with authorities
A Binance spokesperson said: crypto slate That the exchange works closely with regulators to meet all compliance requirements. The spokesperson added:
“Binance invests a great deal of time and resources in working with law enforcement agencies around the world. We comply with all French laws, as we do in other markets in which we operate.”
The exchange declined to comment on the ongoing investigation, but a spokesperson said Binance was inspected by French authorities last week. Such visits by regulators and inspectors are part of the country’s financial firms’ regulatory obligations, the spokesperson said.
The prosecutor said documents and computers collected during the search of the Binance facility would be “subject to detailed investigation.”
A Binance spokesperson claimed that the exchange’s user information is “securely stored and provided to government officials only with proper and documented justification.”
News of the investigation comes on the same day that Binance announced its withdrawal from the Netherlands for failing to secure a license.