US tax sleuths, justice dept set to probe Binance: Reports

Summary

  • Binance faces investigation from US Internal Revenue Service and the Justice Department, say reports
  • German regulator had, last month, warned about the fine that the company might face
  • All crypto exchanges with US$10 billion worth of illicit transactions in 2020

One of world's largest cryptocurrency exchanges, Binance is facing investigation from the US Internal Revenue Service and the Justice Department, reports said.

The probing officials have asked for detailed information from individuals with insights into the cryptocurrency exchange's business, the reported suggested.

Earlier last month, German financial regulator had raised a red flag, saying that the cryptocurrency exchange might face fine for offering its securities-tracking digital tokens without publishing investor prospectus. Notably, the US residents are supposed to purchase these kinds of products only from the companies that are registered with the US Commodity Futures Trading Commission (CFTC).

The crypto exchange has come under the IRS scanner at a time when there have been increasing concerns over the illicit transactions in the bitcoin trade. According to a report by Chainalysis – a cryptocurrency analytics firm – as much as US$10.0 billion of transaction volume across the globe was illicit, making for 0.34% of the total cryptocurrency transaction volume in 2020 – a huge dip from 2019.

In 2019, according to the report, 2.1% of all cryptocurrency transactions – worth a whopping US$21.4 billion – represented illicit activities.

Many policymakers across the globe have been skeptical over the usage of cryptocurrency, as the digital assets offer far more stealthy ways of indulging in illicit trades – like drug dealing and money laundering.


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