What You Need to Know About the Federal Probe Into Binance

Binance’s proximity to its collapsed competitor FTX has given federal prosecutors reason to seek new information in their 4-year-old investigation into the world’s largest crypto exchange.

Over the past few months, U.S. attorneys in Seattle have been asking financial firms to hand over records of communication with Binance, according to a weekend Washington Post report. The newspaper cites two anonymous sources who have reviewed the subpoenas.

The investigation involves the justice department’s money laundering team, the U.S. Attorney's Office in Seattle, and the National Cryptocurrency Enforcement Team, according to a December report by Reuters.

In fact, the Binance investigation itself predates the creation of the justice department’s crypto enforcement team, which was formed in 2021 and got a new director, Eun Young Choi, last February.

“As has been reported widely, regulators are doing a sweeping review of the entire crypto industry against many of the same issues,” a Binance spokesperson tells Decrypt. “This nascent industry has grown quickly and Binance has shown its commitment to security and compliance through large investments in our team as well as the tools and technology we use to detect and deter illicit activity."

The Department of Justice did not immediately respond to a request for comment from Decrypt.

Prosecutors in the U.S. Department of Justice have been at odds on whether the evidence already gathered is sufficient to file charges against Binance executives, according to Reuters, including CEO Changpeng Zhao. Four unnamed sources familiar with the matter told the news agency in December that at least some of the prosecutors involved in the investigation think the government needs to keep building its case before charges are filed.

The people who wanted to wait have so far gotten their way.

US Justice Dept Mulling Criminal Charges Against Binance Founder CZ: Report

U.S. Department of Justice prosecutors are considering filing criminal charges against crypto exchange Binance, and individual executives including CEO and founder Changpeng "CZ" Zhao, according to Reuters. Prosecutors are divided on whether to move aggressively against the exchange or take time to review more evidence, Reuters reported, citing four sources familiar with the matter. The potential charges relate to an investigation launched in 2018 and focused on Binance's compliance with anti-mo...

Binance very publicly called out Reuters on Twitter, saying its December report was “attacking our incredible law enforcement team” and linking to a blog post from its own Tigran Gambaryan, the company’s head of intelligence and investigations.

In the post, Gambaryan touts the company’s handling of more than 47,000 law enforcement requests in 2022. “The brunt of what we do goes on behind the scenes, hidden from the spotlight, and rarely recognized by the media or wider public,” he wrote.

Even as the U.S. investigation has been quietly ongoing, Binance has been packing its compliance department with former federal investigators like Gambaryan, talking publicly about working with law enforcement to find hackers and freezing stolen funds.

Binance Hires IRS Agent Who Helped Crack Silk Road Case

Binance, the world's biggest cryptocurrency exchange, announced on Wednesday that it has hired a pair of IRS sleuths to help it improve compliance. The hires are part of a larger push to reform the company's reputation as a scofflaw that has brought attention from regulators around the world. In a news release, Binance said it has appointed former IRS special agent Tigran Gambaryan as VP of global intelligence and investigations, while another special agent, Matthew Price, will become the compan...

Although the fallout from FTX’s collapse seems to have stoked investigators’ interest in the company, Zhao has been adamant in saying that he and his company did not cause it.

“FTX fell because it misappropriated user assets, and a healthy company will not be destroyed by a tweet,” according to a translation of a post on Binance’s Chinese blog. The post appears to refer to Zhao’s tweet on November 6, which announced that the company would liquidate its FTX Token stash.

“Liquidating our FTT is just post-exit risk management, learning from LUNA,” he wrote on Twitter. “We gave support before, but we won’t pretend to make love after divorce.”

FTX’s Sam Bankman-Fried Was a ‘Master Manipulator,’ Says Binance CEO CZ

Binance CEO Changpeng “CZ” Zhao wants you to know that he’s not one of the “bad guys.” The crypto executive has taken to Twitter yet again to share his latest take on the FTX crisis and collapse, this time addressing five different “narratives” that he says are “wrong” in a thread published Tuesday.  He clarified his stance on what he believes caused FTX to collapse, accused former Alameda Research CEO Caroline Ellison of killing the price of FTX’s token FTT, and tripled down on his belief that...

Meanwhile, there has also been a separate ongoing investigation by the Commodities Future Trading Commission (CFTC) regarding possible insider trading at Binance. News of that investigation was first made public in 2021, the same year the CFTC tried to determine if the company had given U.S. derivatives traders access to its exchange rather than its U.S.-based arm, Binance US.

Given how things have been going in crypto markets over the past year, every collapse intensifies scrutiny of the companies still standing.