- Alleged involvement in facilitating transactions with blacklisted Russian banks.
- Denials from Binance spokesperson, emphasizing adherence to sanctions rules.
- Ongoing legal challenges in the US, including SEC and CFTC lawsuits.
Binance is currently facing backlash over alleged involvement in enabling transactions to and from Russian lenders that are under international sanctions.
As reported in The Wall Street Journal on a recent Tuesday, the world’s largest cryptocurrency exchange allowed its users the choice to utilize five Russian lenders subjected to sanctions, such as Rosbank and Tinkoff Bank, to conduct payments within peer-to-peer transactions.
Through Telegram, individuals known as Binance Angels, who act as independent representatives of the exchange, allegedly communicated to users that there were no trading restrictions imposed on Russian customers.
Nevertheless, an official spokesperson from Binance has categorically denied any connection to Russian banks or engagement in peer-to-peer activities.
The spokesperson emphasized that Binance strictly adheres to global sanctions regulations, enforcing restrictions on entities, individuals, organizations, and countries that have been blacklisted internationally, consequently preventing their access to the Binance platform.
“Binance upholds global sanctions regulations and enforces these sanctions on individuals, organizations, entities, and countries that have been internationally blacklisted, thereby denying such parties access to the Binance platform,” the spokesperson confirmed to The WSJ.
Peer-to-peer transactions involve the direct exchange of cryptocurrencies between individuals, bypassing the exchange’s asset pool and market facilitation.
According to data from Russia’s central bank, Russian individuals conducted around $428 million per month in peer-to-peer cryptocurrency transactions between October and March.
Binance Navigates Mounting Regulatory Challenges
The alleged actions of Binance to circumvent Western sanctions imposed on Russia contribute to the increasing array of accusations directed at the exchange.
Binance has been embroiled in legal disputes in various jurisdictions, including the United States, with legal actions brought forth by both the Commodity and Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), targeting the exchange and its CEO, Changpeng Zhao.
In a prior instance, the SEC filed a lawsuit against Binance and its CEO, citing their “blatant disregard of federal securities laws,” and outlining 13 charges against the platform. These charges encompass operating an unregistered exchange, among others.
The SEC’s claims include allegations that Binance unlawfully offered unregistered securities, including its BNB token and BUSD stablecoin, to the public. Additionally, the agency accused Binance of failing to register as both a broker and an exchange.
Concurrently, the CFTC lawsuit contends that Binance intentionally aided US customers in sidestepping restrictions on cryptocurrency trading, imposed by Binance’s American affiliate.
Rumors have also circulated regarding a potential indictment by the US Department of Justice against Zhao and Binance for potential breaches of anti-money laundering laws.
In response to the ongoing investigations, several senior Binance executives have reportedly resigned. Among those who have departed the company are General Counsel Hon Ng, Chief Strategy Officer Patrick Hillmann, Senior Vice President for Compliance Steven Christie, and former IRS agent Matthew Price.
It is noteworthy that despite the regulatory scrutiny, Binance Labs, the exchange’s venture capital division, has maintained its active investment presence within the cryptocurrency realm.