U.S. sought records on Binance CEO for crypto money laundering probe

A series of Reuters articles this year revealed how Binance drove its explosive growth while keeping weak customer checks and withholding information from regulators

U.S. federal prosecutors asked Binance, the world's largest cryptocurrency exchange, to provide extensive internal records about its anti-money laundering checks, along with communications involving its chief executive and founder Changpeng Zhao, according to a late-2020 written request seen by Reuters.

(Sign up to our Technology newsletter, Today’s Cache, for insights on emerging themes at the intersection of technology, business and policy. Click here to subscribe for free.)

The Justice Department's money laundering section asked Binance to voluntarily hand over messages from Mr. Zhao and 12 other executives and partners on matters including the exchange's detection of illegal transactions and recruitment of U.S. customers. It also sought any company records with instructions that "documents be destroyed, altered, or removed from Binance's files" or "transferred from the United States."

The December 2020 request, which has not been previously reported, was part of a Justice Department investigation into Binance's compliance with U.S. financial crime laws that remains ongoing, four people familiar with the inquiry said.

U.S. authorities, the people said, are investigating whether Binance violated the Bank Secrecy Act. This requires crypto exchanges to register with the Treasury Department and comply with anti-money laundering requirements if they conduct "substantial" business in the United States. The law, designed to protect the U.S. financial system from illicit finance, provides for jail terms of up to 10 years.

Reuters could not establish how Binance and Mr. Zhao, one of the most prominent figures in the crypto sector, responded to the request from the department's criminal division.

In response to Reuters' questions about the letter and investigation, Binance Chief Communications Officer Patrick Hillmann said, "Regulators across the globe are reaching out to every major crypto exchange to better understand our industry. This is a standard process for any regulated organisation and we work with agencies regularly to address any questions they may have."