French investigators have initiated a judicial probe into Binance, the world’s largest cryptocurrency exchange, on allegations of money laundering, tax fraud, and other charges. The investigation, led by the economic and financial crime section of the Paris public prosecutor’s office (JUNALCO), also involves money laundering linked to drug trafficking.
Investigation Spanning 2019 to 2024
The probe covers alleged offences committed in France and across European Union countries during the period from 2019 to 2024, JUNALCO stated. In response, a Binance spokesperson denied the allegations and described the matter as “several years old,” vowing to fight any charges.
Prior Penalties and U.S. Convictions
In a separate case, Binance founder and former CEO Changpeng Zhao was sentenced to four months in prison last year after pleading guilty to violating U.S. anti-money laundering laws. Binance agreed to pay a $4.3 billion penalty. U.S. prosecutors previously criticized Binance for employing a “Wild West” approach, allegedly failing to report over 100,000 suspicious transactions linked to criminal and terrorist activities.
Binance’s Compliance Efforts
Binance stated on Tuesday that it had made significant advancements in its anti-money laundering (AML) and compliance measures. The platform emphasized improvements in Know-Your-Customer (KYC) processes, employee training, and adherence to global AML standards.
Complaints from French Users
The French investigation stems from user complaints about financial losses allegedly caused by incorrect information communicated by Binance. Users also accused the platform of operating without required regulatory approvals.
Earlier Investigations and Allegations
In June 2023, French authorities opened a preliminary investigation into Binance for illegal client canvassing and aggravated money laundering. At the time, Zhao dismissed the news as “FUD” (fear, uncertainty, and doubt) on social media.
Global Legal Challenges
Binance is facing lawsuits and investigations in several countries. This month, the U.S. Supreme Court allowed a case to proceed against Binance and Zhao, involving accusations of illegally selling unregistered tokens that lost significant value.
In December, Australia’s corporate watchdog sued Binance’s local derivatives business, alleging that retail customers had been misclassified as wholesale clients, depriving them of consumer protections.
Crypto Industry Under Scrutiny
Regulators, including the Financial Action Task Force (FATF), have consistently warned about the risks of cryptocurrency facilitating crime. FATF has expressed concerns that crypto assets could serve as a safe haven for criminal and terrorist financial transactions.
Challenges in the Crypto Market
The cryptocurrency sector suffered a significant blow in 2022 due to high-profile bankruptcies that exposed fraud and left investors with heavy losses. Despite this, cryptocurrency prices have surged in recent months, bolstered by U.S. President Donald Trump’s pro-crypto stance.
