The world’s largest cryptocurrency exchange is facing an investigation in France over accusations of providing digital asset services illegally to local customers and implementing insufficient money laundering checks, as reported by the Paris public prosecutor to CoinDesk on Friday.
The Paris public prosecutor’s office has confirmed that Binance’s French division is being investigated for allegedly providing digital asset services illegally and for “acts of aggravated money laundering.”
The French prosecutors’ allegations against Binance pertain to the “illegal exercise” of operating as a digital asset service provider and “acts of aggravated money laundering,” which include competition with investment operations, concealment, and conversion.
These acts were allegedly carried out by individuals who have generated profits from these offenses. Binance is registered as a PSAN, or digital asset service provider, with the French financial regulator.
Binance, which is currently facing a lawsuit from the U.S. Securities and Exchange Commission for alleged failure to register as a trading platform and selling unregistered securities, is suspected of having solicited French customers through its local division outside the legal framework until 2022, as reported by Le Monde.
The Paris public prosecutor confirmed to CoinDesk that an investigation concerning Binance, conducted by the specialized interregional jurisdiction of Paris (JIRS), resulted in a referral to the SEJF, a government anti-financial crime unit, in February 2022.
The prosecutor stated that the ‘documentary and computer elements collected during the search will now have to be the subject of an in-depth study.’
This news also follows Binance’s announcement of its departure from the Netherlands due to its failure to obtain a license demonstrating compliance with the country’s anti-money laundering (AML) guidelines. The company also requested to terminate its registration with Cyprus’ securities regulator, citing a focus on ‘fewer regulated entities in the EU.’
In May 2022, Binance received regulatory approval from France’s markets regulator, AMF (Autorité des marchés financiers). During the Paris Blockchain Week last year, Changpeng “CZ” Zhao, from the company, declared Paris as ‘probably … the financial hub for crypto in Europe and the larger part of the world.’ Binance had also announced a $116 million investment through a partnership with a local nonprofit to boost the French crypto ecosystem.
France has been inviting crypto firms to establish operations in the country, as the European Union prepares to regulate crypto under its recently sealed Markets in Crypto Assets (MiCA) framework.
Following the publication of this article, Binance told CoinDesk that local authorities had visited the company’s offices in France.
“In France, on-site visits by regulators and inspectors are part of regulatory obligations to which all financial institutions must adhere… Binance, as always, was fully collaborative and we met our obligations accordingly. We continue to work closely with regulators and law enforcement agencies on all ongoing compliance requirements to uphold high standards,” a spokesperson for Binance said in an emailed statement to CoinDesk.
“Binance invests considerable time and resources into cooperating with law enforcement globally. We abide by all laws in France, just as we do in every other market we operate. We will not comment on the specifics of law enforcement or regulatory investigations except to say that information about our users is held securely and only provided to government officials upon receipt of documented appropriate justification,” the spokesperson added.
