Binance, one of the world’s largest cryptocurrency exchanges, is facing a new legal hurdle. The company is under investigation by the US Department of Justice for allegedly helping Russian citizens to transfer money in violation of the sanctions against Russia. Despite the claims made against them, Binance has stated they comply with all US and international banking regulations.

In 2021, the exchange launched an initiative to completely overhaul its corporate governance structure and bring in a new executive team. As part of the restructuring, the company introduced a Know Your Customer (KYC) process and subjected all customers to the controls. KYC is a thorough verification procedure used to ensure customers are who they say they are. This process is similar to what’s used in the traditional banking system and requires customers to provide personal identity and proof of country of residence.

The news of the investigations comes shortly after US regulators made an enforcement action against Binance for running an unauthorised digital asset derivatives market. While investigations into the company’s activities are still ongoing, it is important to keep in mind that authorities around the world have long called for stricter regulations on cryptocurrency exchanges in order to stop any potential illegal activity, such as money laundering and terrorist funding.

Binance is certainly not the first cryptocurrency-related entity to face scrutiny. The recent increase in enforcement actions and ongoing investigations could drive up compliance costs both at existing exchanges and newcomers, potentially making the industry less attractive and more expensive to enter. While the future of how regulatory bodies will treat the crypto sector remains uncertain, it is obvious that stricter rules will be implemented to protect investors and fight economic crime.



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