Binance Faces Investigation by U.S. Department of Justice for Alleged Violation of International Sanctions

Binance Under Scrutiny for Alleged Money Laundering and Securities Law Violations

World's Largest Cryptocurrency Exchange Accused of Assisting in Conversion of Sanctioned Russian Bank's Deposits into Cryptocurrencies

Binance, the world's largest cryptocurrency exchange, is reportedly under investigation by the U.S. Department of Justice for allegedly violating financial sanctions against Russia.

According to insider sources cited by The Wall Street Journal (WSJ) on August 22, the U.S. Department of Justice is probing Binance over claims that the exchange violated sanctions by assisting in the conversion of massive deposits from Russian banks subject to sanctions into cryptocurrencies.

Following the conflict in Ukraine, accounts of sanctioned Russian banks were frozen, but substantial amounts of ruble-denominated deposits were reportedly converted into cryptocurrencies through Binance, despite the complex intermediary process. U.S. authorities view this as a breach of international sanctions.

Furthermore, Binance is said to have allowed transactions among its members involving the conversion of rubles into cryptocurrencies, a practice that the U.S. government perceives as an attempt to circumvent the financial sanctions imposed on Russia.

According to the Russian central bank, between October of the previous year and March of the current year, an average of $420 million USD (approximately 5.73 trillion KRW) worth of ruble-denominated deposits were exchanged into cryptocurrencies through individual transactions each month.

Although individual transactions are not directly intervened by cryptocurrency exchanges like Binance, these platforms facilitate and earn commissions from these transactions to ensure smooth operations.

Binance has implemented escrow services to facilitate simultaneous fund transfers and cryptocurrency deliveries in peer-to-peer transactions.

Apart from the alleged violation of financial sanctions against Russia, Binance is also under the scrutiny of the U.S. government for potential money laundering and violations of securities-related laws.

In June, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance and its CEO, Zhao Changpeng, accusing them of inflating trading volumes to deceive customers. The lawsuit was filed in the federal court in Washington, DC.

Binance has responded to the allegations by asserting that it complies with international financial sanctions against individuals, organizations, and countries. The exchange also clarified that individuals or entities listed under sanctions are not allowed to conduct transactions on its platform.