Summary
- Federal prosecutors are probing Binance for allegedly allowing trades that may have violated U.S. sanctions against Iran, as reported by Bloomberg.
- The investigation is being led by the Manhattan U.S. attorney's office, with support from the Justice Department's criminal division in Washington.
- Binance asserts its strict policy against sanctions violations, emphasizing its commitment to eliminating illicit activities.
According to a report from Bloomberg on Monday, U.S. federal prosecutors are investigating whether Binance neglected to prevent trading that could breach sanctions imposed on Iran. The inquiry is being managed by the Manhattan U.S. attorney's office, with the involvement of the Justice Department's criminal division in Washington, focusing on whether the exchange knowingly permitted these transactions.
The specific trades in question have not been detailed, and it is important to note that Justice Department inquiries can conclude without any charges being filed. Representatives from both the Justice Department and the Manhattan U.S. attorney's office have declined to provide comments on the matter.
In response, Binance stated, "We maintain a zero-tolerance policy for sanctions violations," and highlighted its cooperation with law enforcement agencies.
Nearly three years ago, Binance admitted to failing to comply with U.S. banking and sanctions regulations, resulting in a $4.3 billion settlement and the appointment of two corporate monitors. Co-founder Changpeng Zhao stepped down as CEO, served four months in prison, and was subsequently pardoned by former President Donald Trump last year.
In February, Fortune reported that internal investigators had identified over $1 billion flowing through Binance to entities connected to Iran before being dismissed. The Wall Street Journal reported on February 23 about the firings, and the New York Times cited the amount sent to Iranian entities as $1.7 billion on the same day. Following this, Senator Richard Blumenthal initiated a preliminary investigation, requesting records regarding two specific entities, Hexa Whale and Blessed Trust.
Binance refuted these claims in a March 10 statement, asserting that the funds in question neither originated from nor ended on its platform. They claimed that at most $126.1 million reached wallets linked to Iran, with only $24.1 million possibly associated with IRGC-related wallets. The Iranian connections reportedly came to light only after their own investigation began, and they stated that no employees were terminated for raising compliance issues. Additionally, Binance informed Blumenthal that its compliance measures have been effective and has since sued the Journal for its reporting on the matter.
Recently, both entities mentioned by Blumenthal were brought up again when Manhattan prosecutors sought to seize $61 million they allege was laundered through Binance from Iranian black-market oil sales. Prosecutors indicated that two Hong Kong-registered companies misrepresented their business activities, although Binance itself has not been accused of any wrongdoing in this case.
In August, the Office of Foreign Assets Control (OFAC) expanded its authority to impose sanctions on any foreign individual involved in Iran's digital asset sector, regardless of their location, as part of a broader initiative known as Operation Economic Outcast. On September 10, Washington announced sanctions against firms and individuals accused of financing Hezbollah and other Iranian proxies.