Binance, the largest global cryptocurrency exchange, is subject to the initial stages of an investigation in France for both illegal canvassing of clients and aggravated money-laundering.
The investigation was announced by the Paris prosecutor’s office in a statement that said it focused both on “the unauthorised practice of the profession of virtual assets service provider and…aggravated money-laundering.”
A Binance spokesperson said: “In France, on-site visits by regulators and inspectors are part of regulatory obligations to which all financial institutions must adhere. We had an on-site visit last week by the relevant authorities.”
Binance declined to comment on the specifics of law enforcement or regulatory investigations, except to say that information about Binance’s users “is held securely and only provided to government officials upon receipt of documented, appropriate justification.”
Money laundering is a particularly contentious subject for Binance. A crypto exchange named Bitzlato was charged by US federal prosecutors for facilitating the laundering of $700m in crypto tied to the dark-web market Hydra.
Data from blockchain showed that tens of millions of dollars that were transferred through Bitzlato were ultimately deposited in Binance’s accounts, although Binance has not been connected to criminal activity by law enforcement.
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The news does not reflect well on French President Emmanuel Macron, who previously welcomed the crypto-currency exchange.
In a bid to position France as a digital asset hub, France has been especially accommodating to Binance, granting the exchange a Digital Asset Service Provider (DASP) registration by France’s financial regulator the Autorité des Marchés Financiers (AMF).
This is the second time in June that Binance has come under scrutiny by regulators: the US Securities and Exchange Commission (SEC) accused Binance and its CEO, Changpeng Zhao, of lying to regulators, according to a federal suit filed on Monday (5 June).