French authorities have initiated a preliminary investigation into Binance, the world’s largest cryptocurrency exchange, for alleged illegal canvassing of clients and money laundering.
This investigation adds to the recent setbacks faced by Binance, including charges filed by the U.S. Securities and Exchange Commission (SEC) and complaints from French crypto investors.
The Investigation and Binance’s Response
The investigation focuses on unauthorized virtual asset services and aggravated money laundering, as confirmed by the Paris prosecutor’s office. Binance acknowledges an on-site visit by the French authorities and emphasizes their full cooperation. The exchange states that user information is securely held and shared with government officials only with proper justification.
Despite these reassurances, Binance and its CEO, Changpeng Zhao, have faced multiple challenges.
Previous Legal Issues and Complaints
The U.S. SEC filed charges against Binance and Zhao, including operating an unregistered securities exchange and failure to restrict U.S. customers. Binance disputes these charges.
In December, a group of French crypto investors filed a criminal complaint, accusing Binance of misleading the public and promoting its services prematurely.
Furthermore, Binance has encountered obstacles in other European markets.
Removal from Cyprus Register
In addition to the ongoing investigation in France, Binance has recently exited the Dutch market due to registration requirements.
The company has also applied to be removed from Cyprus’ register of crypto asset service providers and has been delisted from the UK’s Financial Conduct Authority (FCA) register. These developments leave Binance without authorized entities in the UK. The investigations and legal issues pose significant challenges for Binance, requiring careful management and adherence to regulatory requirements.