Cryptocurrency firm Binance, the largest crypto exchange in the world, hired several officials from the IRS Criminal Investigation (IRS-CI) division that was responsible for investigating the company over money laundering and sanctions violations, according to Reuters, as prosecutors debate whether to bring charges against the firm.
Binance, founded by Chinese CEO Changpeng Zhao — who is also under risk of prosecution — in 2017, has had the attention of federal investigators since at least 2018, after the exchange exploded in popularity amongst criminals to anonymously move money illegally, Reuters reported, citing sources familiar. In 2021, Binance hired at least five members of the IRS-CI’s Cyber Crime Unit — one of the federal agencies investigating Zhao and his exchange since 2018 alongside the Department of Justice (DOJ) and Seattle-based U.S. Attorneys— at salaries far above industry standards for similar roles, with Binance claiming that these new hires would specifically work alongside law enforcement to prevent criminal activity on the platform.
“We are proud to have in our ranks some of the most celebrated cyber investigators representing virtually every single major international law enforcement agency across the globe,” Binance told Reuters.
The DOJ, U.S. Attorneys and IRS are investigating the company for unlicensed money transmission, money laundering and sanctions violations, with Zhao and other executives also subject to investigation, Reuters reported. While some prosecutors believe there is sufficient evidence to press charges against Zhao and Binance, the company’s defense lawyers have reportedly met with prosecutors and requested plea deals, noting that a criminal prosecution might further damage an ailing crypto market.
Binance holds a commanding grip on the crypto industry, having processed roughly $1.6 trillion in trades in October, about half of the entire crypto market’s trading volume across the globe. According to calculations performed by Reuters, roughly $10 billion in illicit transactions, ranging from routine money laundering to sanctions evasion, occurred on Binance in 2022, a sum the company has disputed, Reuters reported.
The hiring spree came shortly after a Dec. 2020 request for information by the Justice Department’s Money Laundering and Asset Recovery Section (MLARS), requesting access to communications by Zhao and a dozen other Binance executives, seeking evidence that Zhao or Binance had requested the destruction of documents or otherwise prevented staff from keeping accurate records, Reuters reported. Following the letter, an advisor to one of the executives named in the MLARS request received a phone call from that executive, reportedly in a panic because Binance was struggling to comply since relevant documents had already been destroyed.
smh, some media are still working for …
— CZ 🔶 Binance (@cz_binance) December 12, 2022
This advisor alleged that Zhao had personally approved actions taken by Binance.US, a firm split off from the main exchange to operate in the U.S. and which Binance claims is independent, but that the records of these decisions had been deleted already thanks to the CEO’s record-keeping rules, according to Reuters. Binance has encouraged employees to use encrypted messaging services that automatically deleted messages, and Zhao has personally encouraged employees to minimize the use of email in a bid to limit exposure to U.S. regulatory scrutiny, according to Reuters. (RELATED: Federal Prosecutors Had FTX On Their Radar Months Before Collapse: REPORT)
“Ignore [fear, uncertainty and doubt],” Zhao tweeted Monday, referencing a common phrase in the crypto world used to criticize pessimistic investors, hours after the Reuters report. “Keep building!”
Neither the Treasury Department, DOJ or Binance responded to a Daily Caller News Foundation request for comment.
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