PARIS, Jan 28 (Reuters) - French investigators announced on Tuesday that they had initiated a judicial investigation into allegations of money laundering, tax fraud, and other offenses at Binance, the world's largest cryptocurrency exchange, which stated it refuted the accusations.
According to the economic and financial crime division of the Paris public prosecutor's office (JUNALCO), the probe involves money laundering linked to drug trafficking. The investigation covers the period from 2019 to 2024, focusing on offenses committed in France and throughout the European Union, JUNALCO reported.
A spokesperson for Binance declared, Binance categorically denies the allegations and intends to vigorously contest any charges brought against it," noting that the issues date back "several years.
Last year, Binance's founder and former CEO, Changpeng Zhao, received a four-month prison sentence after admitting guilt to violating U.S. anti-money laundering laws. Binance also agreed to pay a fine.
Following an extensive investigation, U.S. prosecutors criticized Binance for operating under a "Wild West" business model that attracted criminals and failing to report over 100,000 suspicious transactions involving designated terrorist organizations.
In response to the allegations, a Binance spokesperson stated that the company had made strides in enhancing its anti-money laundering (AML) and compliance measures, including adopting global AML and Know-Your-Customer (KYC) standards and enhancing employee training.
The French investigation was prompted by complaints from users who claimed financial losses due to inaccurate information provided by Binance, as well as unauthorized trading on the platform, the prosecutor's office noted.
In June 2023, the Paris prosecutor's office disclosed an investigation into Binance for illegally soliciting clients and "aggravated money laundering."
In a social media post, Binance's founder Zhao dismissed the news as "FUD," a term used in the crypto community to discredit negative reports.
Binance is currently ensnared in legal battles and investigations across multiple jurisdictions.
Recently, the U.S. Supreme Court allowed a lawsuit against Binance and Zhao to proceed, involving investors who alleged illicit sale of unregistered tokens leading to significant losses in value.
Additionally, Australia's regulatory body targeted Binance's local derivatives business, accusing it of misclassifying retail customers as wholesale clients, therefore depriving them of consumer protections.
Regulators have consistently cautioned about the potential misuse of cryptocurrencies for criminal activities. The Financial Action Task Force (FATF) has raised concerns that crypto assets could be exploited as havens for illicit financial transactions by criminals and terrorists.
Although the crypto industry faced turmoil in 2022 due to high-profile bankruptcies and fraudulent activities, cryptocurrency prices have surged in recent months amid U.S. President Donald Trump's involvement in the sector.