The federal probe into Binance is unfolding at a time of deep uncertainty in the cryptocurrency industry.
Federal prosecutors are looking into the operations of American hedge funds with cryptocurrency exchange Binance as part of a long-running investigation into alleged money-laundering breaches at one of the world’s major crypto firms.
According to two people who reviewed one of the subpoenas and spoke on the condition of anonymity to discuss the confidential matter, the U.S. attorney’s office for the Western District of Washington in Seattle directed investment firms to hand over records of their communications with Binance in recent months.
According to legal experts, the subpoenas, which have not previously been publicised, do not necessarily indicate that authorities intend to file charges. According to Reuters, prosecutors are negotiating a possible settlement with Binance and assessing whether they have enough evidence to seek accusations against the business.
Binance chief strategy officer Patrick Hillmann said in an interview that the business talks to “nearly every authority across the globe on a daily basis,” but he declined to comment on the status of any US probe. A spokesperson for the Justice Department, Joshua Stueve, likewise declined to comment.
The federal investigation into Binance is taking place at a moment of great uncertainty in the cryptocurrency market. The collapse of FTX, a popular trading platform that authorities allege was a multi-year scam to mislead investors, has heightened worries about the free-wheeling, mostly unregulated internet markets where digital assets are traded and sold.
Failures of cryptocurrency companies are becoming increasingly regular and related. Celsius, a cryptocurrency platform that failed in July, made large loans to FTX subsidiary Alameda Research, which failed five months later.
Changpeng Zhao, the creator and CEO of Binance, was an early FTX supporter, and his decision to sell off a huge portion of the company’s digital tokens contributed to a consumer panic and rush on bank deposits that FTX could not fulfil.