Binance Faces Investigation in France
- Binance, last year, announced plans to make France its regional headquarters in Europe.
- Binance only received approval from the AMF in 2022 but has been operating in France since 2020.
- French regulators claim Binance failed to adhere to measures such as Know Your Customer procedures.
The French division of crypto exchange Binance has reportedly been under preliminary investigation in France for improperly soliciting clients and money laundering since February.
The Paris Public Prosecutor’s Office cited “acts of illegal exercise of the function of a service provider on digital assets (PSAN) and acts of aggravated money laundering by participating in investment operations, concealment, and conversion, the latter being carried out by perpetrators of offenses having generated profits” as the reasons for the investigation.
Local sources claimed that Binance failed to adhere to security measures or comply with Know Your Customer procedures that monitor possible laundering activities. Binance claimed in May 2022 that it had registered with France’s market regulator and announced plans to establish its regional headquarters in France. However, some French crypto investors accused the exchange of offering its services to the public before it was licensed to do so.
A Binance spokesperson confirmed that the French authorities visited the exchange last week. The spokesperson said,
We had an on-site visit last week by the relevant authorities. Binance, as always, was fully collaborative, and we met our obligations accordingly. We continue to work closely with regulators and law enforcement agencies on all ongoing compliance requirements to uphold high standards.
Several regulators have accused Binance of operating without the necessary approval. For example, companies seeking to operate in France are required to receive the approval of the Financial Markets Authority’s (AMF). Interestingly, reports claim that Binance only secured this approval in 2022, despite operating in France since 2020.
Despite the mounting pressures on its operations, Binance maintains that it is law-abiding and plans to cooperate with the relevant authorities. Reacting to today’s news, a Binance spokesperson said in an emailed statement,
Binance invests considerable time and resources in cooperating with law enforcement globally. We abide by all laws in France, just as we do in every other market we operate. We will not comment on the specifics of law enforcement or regulatory investigations except to say that information about our users is held securely and only provided to government officials upon receipt of documented appropriate justification.
Binance’s problems in France could possibly come as a surprise to many. Binance CEO Changpeng “CZ” Zhao had nothing but praise for France during the 2022 Paris Blockchain Week. CZ described France as “probably the financial hub for crypto in Europe and the larger part of the world.”
Binance would also hope to quickly resolve any complications in France to prevent further drama with regulators. The exchange, along with CZ, is currently the subject of a lawsuit filed by the US Securities and Exchange Commission, which accuses the trading company of mishandling funds and operating without a license.