U.S. senators call Binance a ‘hotbed of illicit financial activity’

Representatives of the US Senate Banking Committee, namely Elizabeth Warren, Chris Van Hollen and Roger Marshall, sent Binance letter requesting detailed information about the KYC/AML policy and anti-money-laundering controls.

In doing so, the policymakers accused the platform of evading regulators and of ties to criminals, calling it a ‘hotbed of illicit financial activity’.

In the letter addressed to Binance CEO Changpeng Zhao (CZ) and his US representative Brian Shroder, the senators requested copies of the crypto exchange’s financial reports and information on the number of US-based users since 2017. The document also cites The Wall Street Journal and other major outlets about the company’s numerous legal and financial problems.

“Binance and related entities deliberately evaded regulators, transferring assets to criminals and sanctioned individuals, and also concealed essential financial information from its customers and the public,” the letter says.

The exchange was asked to reveal the nature of the relationship between its parent company and its US subsidiary — Binance.US. The senators are also interested in information about Zhao’s attempts to evade regulators.

The lawmakers drew parallels with the structure of the FTX Group, calling them ‘eerily similar’. They saw a similar likeness in statements about Binance.US’s independence and the former CEO Sam Bankman-Fried’s remarks about the link between FTX and FTX US.

In particular, the senators cited Reuters data, according to which Binance transferred more than $400 million from accounts opened by its US subsidiary at a financial institution, a trading firm Merit Peak, founded by Zhao. This raises questions about whether Binance.US is an independent entity, the letter states.

The officials asked the trading platform to respond by 16 March.

In recent months Binance has faced pressure from politicians and the press. In January Zhao said that the collapsed FTX paid an unnamed media outlet $43 million for a FUD-campaign against his platform.

CZ also had to respond to accusations by Forbes of “moving billions of the exchange’s collateral.” He separately stressed that user funds on Binance have always been secured 1:1.

Earlier, representatives of the crypto exchange commented on comparisons with FTX. The company described the reports of large transactions on Binance as intentional misinformation.