It’s shaping up to be another dramatic year for cryptocurrency. In the last five months, the meme currency Dogecoin has seen its value skyrocket, PayPal has launched cryptocurrency trading, and Tesla has reversed its stance on Bitcoin payments. Adding to the turbulence, contradictory reports indicate that Binance, the world’s largest cryptocurrency exchange, is being investigated by the US Department of Justice and the Internal Revenue Service (IRS).
Binance is the world’s largest cryptocurrency exchange, having been founded in 2017. It is based in the Cayman Islands and has a Singapore office. The US Commodity Futures Trading Commission (CFTC) is investigating whether Binance allows Americans to make illegal trades on its platform by allowing them to purchase futures related to digital currencies, according to Bloomberg. Residents of the United States can only buy these items from companies that have registered with the CFTC. Binance has previously stated that it prohibits Americans from undertaking unlawful transactions on its platform and that violators’ accounts will be frozen.
“Around $756 million out of the total $2.8 billion worth of illegal and criminal transactions of Bitcoin cryptocurrency went through Binance”- Analytics from Chainalysis has reported.
The company’s involvement with federal law enforcement comes as cryptocurrencies face increased regulatory scrutiny. Officials in the United States are concerned that the absence of regulation over digital assets is being exploited to conceal criminal transactions. Meanwhile, the Internal Revenue Service (IRS) is said to be beefing up its capabilities to track those who owe taxes on cryptocurrency investments. If you ask experts, they’ll tell you that policymakers are always trying to catch up with technological advancements.
Binance was created in China, but was forced to leave after a ban on cryptocurrency trading was imposed in 2017. According to Bloomberg, it is now incorporated in the Cayman Islands, a well-known tax haven where corporations and the wealthy conceal their money.
“We have worked hard to build a robust compliance program that incorporates anti-money laundering principles and tools used by financial institutions to detect and address suspicious activity,” a Binance spokesperson said in a statement, he also said that “We have a strong track record of assisting law enforcement agencies around the world, including in the United States.”
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