Binance under scrutiny in France over client canvassing


French prosecutors investigate the crypto exchange for money laundering, tax fraud and drug trafficking.

French investigators have opened a judicial probe into Binance, the world’s largest cryptocurrency exchange, on allegations of money laundering, tax fraud, and drug trafficking among other charges.

The Paris public prosecutor's office (JUNALCO) confirmed Tuesday for the media that the investigation spans activities from 2019 to 2024, involving offences in France and across the European Union.

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JUNALCO said the investigation was prompted by user complaints. Customers alleged they lost money after investing through Binance, citing misinformation and the platform's lack of proper regulatory approvals. A preliminary investigation into Binance began in June 2023, focusing on illegal client solicitation and aggravated money laundering.

JUNALCO’s probe also includes allegations of money laundering linked to drug trafficking.

Binance denied the allegations, assuring that the company would defend itself in a court of law to clear its name.

It emphasized Binance’s advancements in anti-money laundering (AML) measures, including implementing global regulatory standards for AML and Know-Your-Customer processes – the very obligations that the investigators believe it had violated.

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Canvassing of clients refers to the act of actively seeking or approaching potential customers, often in a direct and unsolicited manner, to promote or sell a product or service. It can take various forms, including door-to-door sales, cold calling, street approach, email/online outreach.

The French investigation adds to Binance's mounting legal troubles. In November 2023, Binance and its founder Changpeng Zhao pleaded guilty in the U.S. to money laundering charges. The exchange agreed to pay a $4 billion penalty, while Zhao was fined $50 million and sentenced to four months in prison.

U.S. prosecutors accused Binance of operating under a "Wild West" model that facilitated criminal activities, failing to report over 100,000 suspicious transactions tied to terrorist groups.

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Meanwhile, Binance is also under scrutiny in other jurisdictions, according to Reuters. Earlier this month, the U.S. Supreme Court allowed a case to proceed against Binance and Zhao over claims of illegally selling unregistered tokens. Additionally, Australia’s corporate watchdog sued Binance’s local derivatives business in December, alleging retail clients were misclassified as wholesale customers and denied protections.

Despite its legal troubles, Binance remains the largest cryptocurrency exchange by trading volume, accounting for 34% of December's $2.94 trillion spot market volume.

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