French authorities have launched an official investigation into Binance, suspecting the world's largest crypto exchange of money laundering, tax evasion, and illegal activities within the European Union. The probe, spanning from 2019 to 2024, also explores possible links to drug trafficking, according to Reuters.
Charges and Investigation Details
The Paris Economic and Financial Prosecutor’s Office (JUNALCO) is investigating allegations of laundering proceeds from criminal activities, including drug trade.
Authorities began scrutinizing Binance in June 2023 over potential violations, including illegal client solicitation and aggravated money laundering. User complaints about financial losses due to misleading platform information and licensing irregularities also prompted further inquiries.
Binance’s Response
Binance has denied all allegations and pledged to defend itself vigorously. The company claims the investigation concerns past events, and it has since implemented strict AML (Anti-Money Laundering) and KYC (Know Your Customer) policies, approved by regulatory bodies such as the U.S. Department of Justice and FinCEN.
Previously, Binance agreed to a $4.3 billion settlement with U.S. authorities, and its former CEO Changpeng Zhao (CZ) pleaded guilty to AML violations, receiving a four-month prison sentence.
Binance's Legal Challenges Worldwide
France is not the only jurisdiction where Binance is facing scrutiny:
- United States: Accused of selling unregistered securities, with the Supreme Court allowing legal proceedings to move forward.
- Australia: Regulatory action for allegedly misclassifying retail investors, depriving them of legal protections.
Tighter Crypto Regulations and Market Impact
Regulators globally are ramping up scrutiny on crypto platforms amid concerns about their use in illicit activities. The Financial Action Task Force (FATF) has warned that crypto assets could serve as a “safe haven” for criminals and terrorists.
Despite regulatory crackdowns, the crypto market has recovered, fueled by political support from the Trump administration. However, Binance’s ongoing legal troubles highlight the inevitable tightening of regulations across the industry.
Meanwhile, Binance continues to lose market share. According to 0xScope, its spot trading dominance fell from 52,5% to 39,5% over the past year, while in derivatives, its market share declined from 50,9% to 42,5%. Competitors like Bybit, Bitget, and OKX have gained ground.
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