​French regulator launches investigation into Binance’s activities

What’s new? The French arm of the crypto exchange Binance has been the subject of a preliminary investigation in the country since February 2022. The information was confirmed by the Prosecutor’s Office in Paris, Le Monde reports. According to representatives of the regulator, the investigation “deals on the one hand with acts of illegal exercise of the function of digital asset service provider (PSAN), and on the other hand with acts of aggravated money laundering.”

Le Monde’s material

What else did the Prosecutor’s Office report? Binance is suspected of failing to comply with the identification procedures (KYC) that financial services must carry out to prevent the use of the exchange for money laundering.

Suspicions of “aggravated money laundering” join some of the charges against Binance by the US Securities and Exchange Commission (SEC) in a lawsuit filed against the exchange on June 5. The company is accused of illegally offering its services to US customers.

In the charging documents, the SEC notes that “Until August 2021, Binance didn’t even require all of its customers to complete KYC documents.” The US regulator claims that at least until mid-2022, only 25 million of the platform’s 62 million users had undergone the identification process.

The company is also suspected of violating French legislation regulating the crypto platforms’ activities, which, starting in 2019, requires digital service provider status. The authorization, which is issued by the Financial Markets Authority (AMF), is necessary, among other things, to attract potential French customers.

Meanwhile, Binance, which has been offering its services in France since 2020, is suspected of buying advertising to promote its activities in the country before it was properly registered with the AMF in May 2022.

According to a Binance spokesman, in France, inspection visits by regulators and inspectors are part of the legal obligations to which all financial institutions are subject. Thus, he reported that last week the competent authorities visited the offices of the French arm. The representative stressed that “As always in this case Binance has fully cooperated.”

Binance said that during the search, French justice seized the necessary documents for further examination. The company said it “respects all laws in France as in all countries” where it operates, and explained that it could not “comment in detail on investigations by regulators or forces of the other.” That said, the exchange assured that all customer information is kept safe and only shared with authorities as part of a reasonable legal requirement.

Binance’s problems with regulators. On June 16, the exchange announced it was leaving the Netherlands after failing to obtain a Virtual Asset Service Provider (VASP) license. The exchange’s representatives stressed that they will continue to interact with local regulators.

Начиная с 17 июня, нидерландские пользователи смогут только выводить активы с платформы. Функция обмена и депозитов будет заморожена.

Starting June 17, Dutch users will only be able to withdraw assets from the platform. The exchange and deposit function will be frozen.

In March, the US Commodity Futures Trading Commission (CFTC) also filed a lawsuit against Binance, accusing the exchange and its CEO Changpeng Zhao of allowing US customers on the global platform to maximize their own profits. As part of it, the regulator classified cryptocurrencies BTC, ETH, and LTC as securities.