Binance faces federal investigation on alleged tax evasion, laundering

Binance faces federal investigation on alleged tax evasion, laundering

Binance Holdings, Cayman Islands based world’s largest cryptocurrency exchange has reportedly come under federal investigation over tax evasion and money laundering.

It has been reported that Binance is being investigated by the Internal Revenue Service and the Justice Department.

Speaking on the matter, the Binance stated that it has a robust compliance program that embodies anti-money-laundering principles and tools used by financial institutions for identifying and addressing suspicious activities. It added that the company cooperates with law enforcement.

The scope of the investigation on Binance is not known. However, the market is seeing this as the beginning of a long-feared crackdown by the U.S. government on the crypto space, according to the reliable sources.

Regulators long had concerns regarding cryptos that they are funding illegal activities like tax evasion or money laundering. Apparently, hackers also traffic using cryptos. For instance, operators at the Colonial Pipeline had reportedly paid nearly $5 million in ransom to the Eastern European hackers in an untraceable crypto post hacking of its pipeline.

Crypto exchanges are known to have been hacked and blamed for alleged price manipulation. In this regard, regulators are working on formulating comprehensive rules for governing the exchanges and wide crypto trading markets.

The news of the investigation seemed to be another shock for the crypto market. Prices for Bitcoin and other crypto currencies were already reeling following Tesla CEO Elon Musk’s tweet stating that Tesla will no longer accept payments in Bitcoin for its cars.

Reportedly, the largest publicly traded crypto-exchange Coinbase Global (COIN) closed 6.5% to $265.10. Riot Blockchain was off 16%, Grayscale Bitcoin Trust was off 11.4% to $37.18 and the newly launched Bitwise Crypto Industry Innovators exchange-traded fund closed 7.5% to $21.49.

Market experts are seeing this dip in the stock of Coinbase as a buying opportunity. According to them, unlike decentralized exchanges, Coinbase developed its platform on a centralized model and has been cooperating with the government regulators.

Source credits: https://www.barrons.com/articles/binance-is-under-federal-investigation-bitcoin-coinbase-and-the-crypto-world-are-reeling-51620940200