The United States Internal Revenue Service and Department of Justice are reportedly investigating cryptocurrency exchange giant Binance for alleged money laundering and tax evasion.
In a report by Bloomberg, it says that both the DOJ and the IRS have gained information from individuals with insight into Binance’s business for the federal investigation that is being described as confidential.
The crypto exchange company is being accused of not having adequate government oversight as well as lack of corporate headquarters and incorporation to Cayman Islands where there are no taxes and more “lenient business practices” are offered.
Binance responds on the matter
A spokesperson from Binance responded to reports about the investigation and has explained the exchange’s side.
“Take their legal obligations very seriously and engage with regulators and law enforcement in a collaborative fashion,” the spokesperson said, who also emphasized they have worked hard to establish a strong compliance program incorporating anti-money laundering principles and tools “used by financial institutions to detect and address suspicious activity.”
This is not the first time that Binance has been involved in legal troubles. It’s been under the scrutiny of European regulators such as the U.K. Financial Conduct Authority and the BaFin of Germany.
Used for criminal activity?
Bitcoin and the whole crypto space have had to deal with the criticism of being used for criminal activities for a long time now.
In January, U.S. Treasury Secretary Janet Yellen expressed concerns over digital currencies that are used for terrorist activities and illegal financing. Charlie Munger, considered a major financial figure, even associates the industry with kidnapping and extortion.
Blockchain-based data analytics Chainalysis reported in 2019 that based on their transactions analysis, the cryptocurrency exchange in question has had more funds tied to criminal activity as compared to other exchanges.
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