U.S. Senator opens probe on Binance over alleged $1.7 billion flow to Iranian entities
TL;DR
U.S. Senator Richard Blumenthal has opened a Senate probe into Binance over allegations that $1.7 billion was transferred to Iran-linked entities. Binance denies the claims, citing strict compliance procedures and no Iranian users, while conducting an internal review to report to the Justice Department.
Key Takeaways
- •Senator Richard Blumenthal is investigating Binance for alleged $1.7 billion transfers to Iran-linked organizations, including Houthi militants.
- •Binance denies the allegations, stating it has strict KYC/compliance procedures and no Iranian users, and calls media reports about dismissed investigators false.
- •Blumenthal requested records on Binance's dealings with Hong Kong entities tied to the transfers and on compliance staff suspensions/firings.
- •Binance's founder previously pleaded guilty to AML violations involving sanctioned countries like Iran, resulting in $4.3 billion penalties and U.S. market exit.
- •Binance is conducting an internal investigation, with a full report due to the U.S. Justice Department on February 25.
What to know:
- Senator Richard Blumenthal has opened a Senate probe into Binance over reports that $1.7 billion was transferred from the crypto exchange to Iran-linked organizations, including Yemen’s Houthi militants.
- Binance has denied the allegations, saying it has strict know-your-customer and compliance procedures and no Iranian users, while asserting that media reports about internal investigators’ dismissals are false.
- Blumenthal has requested records on Binance’s dealings with Hong Kong entities tied to the alleged transfers and on the suspension and firing of compliance staff, as the exchange conducts its own internal review to be reported to the Justice Department.
- Senator Richard Blumenthal has opened a Senate probe into Binance over reports that $1.7 billion was transferred from the crypto exchange to Iran-linked organizations, including Yemen’s Houthi militants.
- Binance has denied the allegations, saying it has strict know-your-customer and compliance procedures and no Iranian users, while asserting that media reports about internal investigators’ dismissals are false.
- Blumenthal has requested records on Binance’s dealings with Hong Kong entities tied to the alleged transfers and on the suspension and firing of compliance staff, as the exchange conducts its own internal review to be reported to the Justice Department.
U.S. Senator Richard Blumenthal, a top Democrat on the Senate Homeland Security Committee, on Tuesday opened a probe into alleged sanctions violations at crypto exchange Binance, the New York Times reported on Wednesday.
Blumenthal, who represents Connecticut, sent Binance a letter asking about the $1.7 billion allegedly transferred from accounts on the platform to Iran-linked organizations, including Yemen’s Houthi militants. The violations were identified by internal Binance investigators who were subsequently dismissed, according to several news reports. The world’s largest crypto exchange denied the allegations in an email to CoinDesk.
“The New York Times’ prior reporting is wrong. Binance has strict KYC (know-your-customer) and compliance procedures in place, and there are no Iranian users on the platform,” a Binance spokesperson said in the email. The spokesperson also reiterated the exchange’s stance “against false claims in these reports”, referring to articles by the New York Times, Wall Street Journal and Fortune about the alleged dismissal of the four investigators involved.
Blumenthal sent a letter to Binance’s co-chief executive Richard Teng asking for records of the company’s dealings with two Hong Kong entities identified by the investigators as the origin of the transfers to Iran, the New York Times said.
One of the accounts was registered to Blessed Trust, a Hong Kong company that served as a Binance vendor. According to the newspaper, a Binance representative said the exchange canceled the accounts and stopped working with Blessed Trust in January.
“Binance appears to have ignored warnings and recommendations to prevent Iranian money laundering schemes on its cryptocurrency exchange,” Blumenthal wrote. The lawmaker also asked Teng to hand over records about “the suspension and dismissal of compliance staff and investigators” who flagged the alleged violations.
Binance’s founder and former CEO, Changpeng Zhao pleaded guilty in November 2023 to violating anti-money-laundering laws and allowing customers in countries under sanctions, including Iran, to transact on the platform. The company agreed to pay $4.3 billion in penalties and leave the U.S. market. Zhao served four months in prison for his role before being pardoned by President Donald Trump.
Binance said in a blog post on Sunday that its "sanctions-related exposure is minimal.” Rachel Conlan, another spokesperson, told the Times, there is an ongoing internal investigation at the exchange and that a full report would be sent to the U.S. Justice Department on Feb. 25.
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